How will Microsoft deal with the free OS updates thing?

Yesterday Apple announced that Mavericks update will be free. What if all the following updates will also be free, how will MS counter this move from Apple? And what will it do with that free iWork offer?

The OS/Office sales business is one of the core sources of revenue for Microsoft, and they can't easily give those for free.

What they can do is sell the licenses bound to the PC, so for a little more money your PC will be

* entitled to the free office 365 home and student activation,

* entitled to free OS updates until the end of times.

What do you think?