Re: How will it make money?
They've already been effectively giving it away with every Lumia shipped thanks to those support payments and cheap Lumia's are essentially the entire WP market. So far it's the only thing that's worked to drum up sales and they can't afford to stop.
As the new owner of the phone business they were laundering the subsidy (AKA free licences) through they're forced to offer everyone the same deal or face a visit with regulators.
The alternative is giving up on the big 'Win8 ecosystem' plan. Amazon have just screwed the XBox1 side of that deal with FireTV, Win8 continues it's slow train wreck and WP is just about holding on. They're desperate, half the company is staked on that ecosystem and it's not going well. They're aiming for survival right now, not making money.