Windows 8 Makes Microsoft’s Future Uncertain

Windows 8 Makes Microsoft’s Future Uncertain

By UCStrategies Staff December 14, 2012 Leave a Comment
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Windows 8 Makes Microsoft’s Future Uncertain by UCStrategies Staff

Microsoft is putting all of its eggs in one basket with Windows 8; its success or failure could determine their fate.

This is the view given by Microsoft’s chief executive Steve Ballmer, at least. According to him, “our hardware partners are all in, companies like Verizon and AT&T are all in, there are hundreds of operators and retailers around the world who are all in, developers are all in, and if anyone wasn't convinced yet Microsoft is all in.” He spoke these words at October’s Windows 8 launch event in San Francisco.

Financially speaking, however, Microsoft might not be as “all-in” Ballmer originally suggested. In fact, the company has several other areas to pursue in case the new look for Windows fails to deliver as promised. In the last year, Microsoft’s revenue from the new operating system only made up 25 percent of the total sales. Moreover, nearly half of the 25 percent are the result of enterprise licensing agreements, which generate cash whether the customer upgraded to Windows 8 or chose to stay with their current operating system.

Regardless of how Windows 8 is received, the company will not crumble for financial reasons. But what if Windows 8 does fail? What would this do to the future of Microsoft’s client-oriented operating system business?

According to Michael Cherry, an analyst at Directions on Microsoft, “the current Windows code is now 20-years-old, so for Microsoft doing nothing is just as risky as attempting to introduce the new Windows.”

He continues by stating that “anything can fail and disappear.” For example, “Wang was once the big name in word processing but it has gone, and DEC is no longer around today. Windows is used in so many places that it would take more than a single screw-up by Microsoft for Windows to disappear, but I wouldn’t say that it could never happen.”

Yet failure on the Windows 8 front would have more severe consequences for Microsoft than Windows Vista’s failure. When that operating system showed its first signs of weakness and did not reach the achievement level that they had hoped, Microsoft quickly moved to their next release, Windows 7. Windows 7 has proven to be a much more stable and secure operating system, popular with both consumers and enterprise customers alike.

Yet things are different now. Windows 8 is more than just a new operating system for the desktop computer; it is a piece of a broader Windows 8 ecosystem that also includes operating systems for the tablet computer and smartphone markets also. All of these devices will use a similar tile-based user interface. This means, then, that Microsoft is unable to abandon the desktop user interface without also leaving the “one interface for all devices” idea in ruins.

Although it was originally designed to be the user interface for the Windows Phone, Microsoft has decided to also pin its Windows desktop hopes using this same interface. Unfortunately, the Windows Phone has been less than impressive so far. IDC figures from the third quarter of 2012 show that the Android operating system captured the largest sales with 75 percent of the market, with Apple’s iOS arriving in second place with a bit less than 15 percent.

Windows Phone, on the other hand, holds less than four percent – a meager amount when compared to the leading operating systems. Some blame the lack of apps as a potential reason for the current failure of Windows Phone, yet earlier versions of iOS and Android faced the same challenges but thrived nonetheless.

The outcome of Windows Phone may actually be irrelevant to the fate of Windows 8. This is due to the fact that the “one interface for all devices” strategy is primarily focused on the rapidly increasing tablet market, according to Forrester Research’s senior analyst David Johnson. He says that “the big value proposition is the communality across form factors” and “Microsoft’s best chance is that employees want to use Windows tablets and bring them in to their workplace.”

Thus, the most important element for Microsoft is for the Windows 8 interface to prove popular with tablet computers. This could be either with the more consumer-oriented ARM-based tablets with Windows RT or the Intel-based tablets running Windows 8 Pro, the latter of which can be managed by IT departments, making it more suitable for enterprise use.

A positive feature is that even though the Windows Phone devices have suffered in sales, there seems to be a big interest in the Windows tablets. Forrester recently released findings of their survey stating that 20 percent of respondents intend to use a Windows tablet for work, whereas 26 percent plan to use an iPad.

However, it is important to note that this survey was completed before Windows 8 tablets were released, so the risk of rejection for Windows 8 on tablets still remains. If neither the phone nor the tablet platforms take off, Microsoft will only have the desktop operating system, which would have no reason to exist. According to Johnson, “if enterprises are slow to adopt Windows tablets or don't see the value proposition then that whole strategy is at risk.”

Michael Silver, a research vice president at Gartner, also backs up this view. “If Windows 8 on the phone doesn’t take off then it’s really no big deal for Microsoft,” he says. “But if they do poorly with the tablet this has much bigger implications.” He continues by explaining that at this stage, the only driver to deploy Windows 8 is to create a unified operation system for both tablet and PC users. This way, if the Windows tablets fail to be successful then the driver just disappears.

There are still barriers to the adoption of Windows 8, however. With a new interface comes a new way of working, which likely entails a certain amount of training and experimenting before the productivity levels could reach the same height as pre-Windows 8 days.

“The new user interface is less of a problem than it would have been 10 years ago because people have got used to mobile interfaces,” according to Johnson. “But our surveys show that companies are concerned about this, they don’t think the user interface changes are good changes.”

Maybe Ballmer’s true meaning behind his “all-in” comment was merely that there is no going back from the new Windows 8 changes. In other words, if Windows 8 is a failure, then there will be more of the same, including a new interface, for the next Windows 9 version. In the words of Michael Cherry from Directions at Microsoft, “Windows 8 should be seen as the start of a journey. The current Windows code is now 20 years old, so for Microsoft doing nothing is just as risky as attempting to introduce the new Windows. At some point they really do have to get off the old plumbing.” (RP) Link


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