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Shane O'Neill
Shane O'Neill
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Windows 8 And Einstein's Definition Of Insanity

Microsoft is stuck beating the same drum to a public that has made up its mind about Windows 8 and Surface devices. Is it too late to make changes?

It's been a rough two weeks for Microsoft and Windows 8.

The company revealed that its Windows 8-based Surface products generated only $853 million in sales in fiscal 2013, and that it took a $900 million write-down because of unsold Surface RT devices. Not the returns Microsoft was hoping for.

For perspective, research firm IDC estimated that Apple sold 19 million iPads in the first three months of 2013, adding up to an annual run rate of roughly $38 billion.

One InformationWeek reader, commenting on a story about the Surface slump by Michael Endler, put it succinctly (even if he overdid the nautical metaphors):

"Microsoft missed the boat on tablets and now they are trying to catch up. The problem is, they jumped in the water after the boat left the dock and now they are swimming against a riptide."

[ Microsoft's latest OS update addresses many concerns for business users, but questions remain. Read Microsoft Releases Windows 8.1 Enterprise Preview. ]

What can Microsoft do? Cutting prices is a good first step. Many will accuse Microsoft of admitting failure. Too bad. The market has spoken and the Surface devices are overpriced. Microsoft wisely decided to cut the price of the dead-in-the-water Surface RT by 20% to 30%, depending on the model. The 32-GB model is now $349, down from $499. Microsoft may need to keep cutting to spark Surface RT's inertia.

The 64-GB Surface Pro is priced at $899 ($1,000 with keyboard cover!) and needs to be on par with or less than the iPad's $600 to $800 price range. As for those $120 keyboard covers that cost $18 to make: Include them for free.

Microsoft will have to take a hit on the sale price to get people using the Windows 8 Modern UI and buying apps and content from the Windows Store. That's what Amazon had to do with the Kindle Fire. To overdo a baseball metaphor, Microsoft thought it could price high and get into the tablet game on third base. But it has to step up to the plate like everyone else.

In pushing a product very few people want, a big part of Microsoft's solution is to hang tough and make incremental changes. But another part, unfortunately, is to yell louder: "YOU WILL LIKE THE MODERN UI IF WE KEEP ADVERTISING IT! YOU WILL LIKE THE HOMESCREEN TILES! It reminds me of Einstein's definition of insanity.

What about Windows 8.1? It has some solid additions, such as boot-to-desktop mode and a restored Start button. But it's a coat of paint and not real change. It's too late to significantly change Windows 8 anyway. Consumers and business customers didn't bite. Those weak Surface sales numbers speak volumes, as do an unprecedented decline in PC sales this year. As for its overall Windows 8 sales, Microsoft isn't breaking them out in its financial report, but for the fourth quarter, it said that total Windows revenue was down 6% for the quarter and 1% for the entire fiscal year compared with year-earlier periods.

In contrast, the iPad immediately fascinated the buying public when Apple introduced it in the spring of 2010. It didn't take a year to marinate -- it took 5 minutes. Android took longer, but Android operated in the shadows and slowly reached critical mass on smartphones first and is now leading the way on tablets as well. Android currently owns 52.4% of the smartphone market compared to Apple's 39.2%, according to comScore. Meantime, Android accounted for 67% of global tablet shipments in Q2 2013, according to Strategy Analytics. This growth happened organically; the masses (and the hardware makers) came to Android. Unlike Windows 8 and Windows RT, its success wasn't predicated on mass advertising.

Microsoft desperately needed consumers to snatch up Windows Phone smartphones and Surface tablets and bring them to work BYOD-style. That hasn't happened, and it's a serious threat to Windows' enterprise winning streak.

But make no mistake, Microsoft is still comfortably in the black. Last week it reported revenue of $77.85 billion for fiscal 2013, a 6% increase over the previous year. In Microsoft's just-ended fourth quarter, revenue for the company's Business Division (led by Office) grew 14% compared with the year-earlier quarter. It was up 3% for the year. Microsoft stated in its financial report that Office 365 is now on a $1.5 billion annual revenue run rate. The Server & Tools division revenue grew 9% for the quarter and 9% for the full year, driven by double-digit percentage revenue growth in SQL Server and System Center.

With SQL Server, System Center, Windows Azure, Lync and Office 365 product lines all healthy and growing, maybe Microsoft should stop trying to wow consumers and be more like Oracle, with its singular enterprise focus.

But the company's planned reorganization implies Microsoft is trying to be Apple-like by streamlining its portfolio of software, services and devices.

If Microsoft has any chance of becoming an Apple-like player in consumer computing, the best it can do now is retrench on its mobile strategy and re-enter its Surface devices running Windows 8.1 at lower prices and longer battery lives. Microsoft blew it by pricing Surface too high. Come back down to earth. Give buyers a deal. It may be the only way to keep Windows 8 vibrant long term.

Just don't keep doing the same thing and expect a different result.

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User Rank: Guru
8/3/2013 | 1:38:31 PM
re: Windows 8 And Einstein's Definition Of Insanity
Agree completely.

Incredulous that despite the deafening backlash Microsoft continues down this flawed path. Trying to use the Start Screen for anything is akin to using a butter knife as a screwdriver. It might work, but it's definitely NOT the right tool for the job. The whole experience is condescending and amateurish.
User Rank: Apprentice
8/3/2013 | 1:30:58 AM
re: Windows 8 And Einstein's Definition Of Insanity
A third-party vendor (Stardock) has been doing for a year what Microsoft refuses to do - restore the full Start menu (not just the button) and fix Metro full-screen apps that can't window and don't have a click button to close. With Start8 and MetroMix in place for under $10, Windows 8 isn't awful. It's Windows 7.1 with a few big improvements like Client HyperV and the Task Manager.
Becca L
Becca L,
User Rank: Apprentice
8/2/2013 | 7:52:02 PM
re: Windows 8 And Einstein's Definition Of Insanity
For those as curious as I was... "[The quote] has been mis-attributed to Albert Einstein, Benjamin Franklin, and Mark Twain. In fact, none of these great minds were responsible for such a convincing, yet blatantly incorrect definition. The first time it actually appeared in print was in a 1981 Narcotics Anonymous text (page 11)."
User Rank: Apprentice
8/2/2013 | 6:52:05 PM
re: Windows 8 And Einstein's Definition Of Insanity
Fortunately, Microsoft is too full of pride to admit they made a mistake. So they will keep making the mistake.

As a long time Microsoft detractor, I am so glad Ballmer runs the place. He will continue to bring them down.
Palomar Parkman
Palomar Parkman,
User Rank: Apprentice
8/2/2013 | 6:15:47 PM
re: Windows 8 And Einstein's Definition Of Insanity
The quote attributed to Einstein is not his. Do your homework - NOT SMART!
User Rank: Moderator
8/2/2013 | 5:46:10 PM
re: Windows 8 And Einstein's Definition Of Insanity
its frustrating because the Metro/Modern was really needed. We have an older touchscreen laptop and I tried playing around on Win7 using touch exclusively, it was quite the frustrating experience, too many things are too tiny to hit right. So a new paradigm really was needed and the touch interface is well done in Win8.

What is frustrating is the forcible lock on it. People would have been so happy to have a new way to easily download Angry Birds, but by forcing it on people as the only solution they generated a lot of ill will and eliminating desktop development to focus on lackluster simplistic-consumer-centric apps only aggravated it

Now that 8.1 Metro/Modern is removing the ability to access pictures *anywhere* except skydrive and the single default pictures location (and presumably other apps will follow as well) it seems that they are heading 180 degrees away from any/all power/business users.
User Rank: Ninja
8/2/2013 | 5:37:37 PM
re: Windows 8 And Einstein's Definition Of Insanity
There is nothing new or innovated about the Surface product line putting the price point way out of line. From a hardware perspective it's old stuff and not completive. From a software perspective it's not intuitive enough. Unless there is someone at Microsoft that can tell the king (Ballmer) he has no cloths, I doubt any turn around is in the near future for Surface. The Zune may have some company in Microsoft's product graveyard.
User Rank: Strategist
8/2/2013 | 4:44:59 PM
re: Windows 8 And Einstein's Definition Of Insanity
Cutting the price will not, to use an overused analogy, make a silk purse out of a sow's ear. People generally dislike (or hate) the Modern UI and by extension Win8, and a low price won't entice a lot of folks into buying this steaming pile of dog crap

Microsoft blew it, and its time to give in and admit defeat, even if it is only a tacit admission via a quick release of Win9 with the real desktop and real start menu back as the default.
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