I don't think Microsoft would intentionally compete with Windows, but it does seem as though they are preparing for a world where Windows is no longer their golden goose, or at least hedging their bets. Given that Windows has already decisively lost the battle for servers, this seems prudent.
It’s already no longer their golden goose. It’s about 6% of total revenue (see http://bullfincher.io/companies/microsoft-corporation/revenu...).
Microsoft could give Windows away for free and be fine. Of course it’s still a lot of money, so they’re not going to leave a multibillion dollar business on the table. But strategically, preserving its revenue is not their priority.