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2/28/2014
09:06 AM
Michael Endler
Michael Endler
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Microsoft's Windows Strategy: A New Hope

Microsoft's Mobile World Congress announcements suggest a successful, and overdue, new direction for its Windows 8.1 strategy. Now Microsoft needs to build momentum.

Windows XP Shutdown: 10 Facts To Know
Windows XP Shutdown: 10 Facts To Know
(Click image for larger view and slideshow.)

Does Microsoft finally have a viable strategy for Windows 8.1?

At Mobile World Congress, the company confirmed Windows and Windows Phone updates that will open the platforms to broader ranges of hardware. The Windows 8.1 update should make the touch-oriented OS easier to use on non-touch devices. Both updates should allow OEMs to manufacture much cheaper products, delivering Windows 8.1 devices into the same price brackets that have made Chromebooks and Android devices so popular.

The lower price ranges are important because they represent the greatest growth opportunity. According to the research firm IDC, smartphone shipments will dip to single-digit percentage growths by 2018, with most of the expansion coming from low-cost devices sold in emerging markets. IDC has said the tablet market is maturing even faster.

[Will Microsoft Office be a success on the iPad? Read Microsoft Office For iPad: Do It Right.]

IDC projects Windows platforms will account for 7% of the smartphone market in 2018 and 10.2% of the tablet market in 2017. In both cases that's a distant third behind Android and iOS. Predictions like these demonstrate why some Microsoft critics resist the company's device ambitions.

Microsoft defenders like to spin such forecasts by pointing out that Windows platforms are poised to achieve better percentage growth than iOS or Android-based ones.

This is the wrong way to look at it. High-percentage growth is easier to achieve when the base volume is low. If a company sells 10 units one year and 50 units the next year, it achieves remarkable growth in percentage terms -- but unless each unit is incredibly profitable, the company still probably isn't making much money. This is the dilemma Microsoft faces: Because it arrived late to the mobile market and stumbled once it got there, it faces few growth avenues, most involving little direct profit. It's worth noting that even though IDC projects Windows growth, it expects Apple to maintain its lead in the most lucrative segments.

Will Microsoft score with cheaper hardware and a UI that's better suited to mice and keyboards?
Will Microsoft score with cheaper hardware and a UI that's better suited to mice and keyboards?

Microsoft's forthcoming updates could improve the situation in several ways. First, they enable Windows platforms to cut into Android's slice of the emerging-market pie. Microsoft hasn't confirmed reports that it is cutting Windows Phone or Windows licensing costs, but at Mobile World Congress, its dedication to low-cost devices was clear. Windows devices have made modest progress as prices have slid lower -- and with a likely fleet of sub-$200 options on the way, that progress could outpace IDC's expectations.

By creating a larger footprint in emerging markets, Microsoft impedes Android from becoming the reference point for a new generation of users -- a battle Nokia CEO Stephen Elop referenced when he explained how the Android-based Nokia X platform could still benefit Microsoft. With victories on this front, Microsoft could not only sell more of its software and services, but also create a market for potential device upgrades. This could give the Surface line some breathing room.

Essentially, Microsoft could become to its own operating systems what Samsung is to Android. Even though Google's OS commands more users than any other platform, Samsung is the only Android OEM that really makes much on devices. It's a problem with emerging-market domination. High volumes of low-margin devices don't necessarily translate to a lot of profit. When Microsoft launched the Surface RT, it assumed it would capture premium market share simply by showing up. As last quarter's record iPad sales indicate, this hasn't been the case. But the updates give both Windows and Windows Phone OEMs more incentive to do the heavy lifting in budget markets. If the tactic attracts more Windows 8.1 users, demand for the Surface 2 and other, more expensive, devices can only increase.

At the same time, this Windows update demonstrates Microsoft's awareness that traditional designs aren't going away. Windows 8's reliance on touch alienated many longtime Microsoft customers, and Windows 8.1 appears to have undone only some of the damage to the product's reputation. The update coming this spring appears to still lack a Start menu, which will disappoint desktop users.

Still, a version of Windows 8 that works better on non-touch devices can only help. Combined with increased attention to emerging markets and a renewed push from OEM partners, Windows 8's prospects are better than they have been in some time.

Microsoft's next challenge will be to sustain this momentum in April, when it will hold Build, its conference for developers. After taking so much heat for Windows 8, it could use a home run. If online chatter is any indication, the company might have some more surprises in store for Build, such as Cortana, its long-rumored Siri competitor, or perhaps even an early peek at Windows 9.

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Michael Endler joined InformationWeek as an associate editor in 2012. He previously worked in talent representation in the entertainment industry, as a freelance copywriter and photojournalist, and as a teacher. Michael earned a BA in English from Stanford University in 2005 ... View Full Bio

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mikemuch
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mikemuch,
User Rank: Apprentice
2/28/2014 | 9:27:38 AM
Not just for touch.
Really sick of hearing this stuff about Windows 8/8.1 being only for touch devices. I've been using it on a desktop with mouse and keyboard and find it smooth and quick. After learning just a couple new habits, I feel like I can get around the OS faster than in legacy Windows OSes. Also sick of hearing the lamentation over the loss of the start button. The Start screen is just a full screen start button! With a little experience and setup, you can actually get to what you want--new or old-style app--faster with it. Just as with the old start button, just start typing to show the program you want. Or just put tiles for programs you use all the time in easy click reach.

Another thing I'm tired of hearing is that no one wants a touch-screen on a desktop or laptop. I just visited an older friend who got a new touch-screen Windows 8.1 laptop, and he very much likes the ability to just poke the item on the screen to start it.
rradina
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rradina,
User Rank: Ninja
2/28/2014 | 11:24:31 AM
Re: Not just for touch.
I agree.  Every time Microsoft has ever changed something they alienate some/most/all existing customers.  I'm certainly not dismissing the idea that improvements to Win8's non-touch UI aren't needed or welcome  I'm just agreeing that any change always generates a certain amount of hate and that it's way past being thoroughly debated.
anon5351707475
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anon5351707475,
User Rank: Apprentice
2/28/2014 | 12:31:18 PM
Re: Not just for touch.
Really sick of this, tired of hearing that. What's next...tell those darn kids to get off your lawn!
jtiggy@gmail.com
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jtiggy@gmail.com,
User Rank: Apprentice
2/28/2014 | 3:45:47 PM
Re: Not just for touch.
I agree with mikemuch.  I was a beta tester for Windows 8 and its updates.  It was (and is fast on my desktop HP with a fast processor) not a touch screen computer.  But I learned something early on.  Microsoft's marketing tripped over its own feet as when you install Windows 8 you really get two OS and not just one.  Had Microsoft said Windows 8 desktop pretty much what you have been using all along but if you have programs you use a lot you can create a tile for them and just click on them to go to them faster.  Well, I thought so much of the beta product that I bought 8.0 and I thought so much of that, even with its need for fixes (which have been done) that I bought my wife a Windows Eight phone with the idea that once she was use to that I would introduct to her Surface.  Which I did!  She had adapted well to the phone and is adapting well to the Surface RT as she understands the tiles.  All she does is surf the internet, FaceBook and e-mail.  I am still weeing her off her 5 year old Nokia booklet which she had a lot of trouble with keeping it in the Wi-Fi mode.  When I showed her that the Surface could be either the new interface or the old desktop she warmed up even better.  As it turns out she is using the new interface more and more and not reverting to the desktop as much (I set that up for her just like the Nokia booklet). But, I also set the new OS up with tiles that went right to the programs and things she liles to do most. 

 

What about me?   Well, I still have a couple XP programs I need to run and therefore have to run XP in the Windows 7 OS or the 8.1 HYPER-V mode.  I one of those probrams will convert but the ACT! 6.0 won't and I 4,000 names in that database PLUS I can write letters with Word from office 2003.  I think what I am going to do, when money permits, is get a Surface Pro 2 with docking station.  I understand I can run Hyper-V on it (not on the 8 inch tablets form Dell or other sourcs) and move on that way.  I will then abanon my desktop HP running 8.1 execept for back up, and the HP notebook running Windows 7 for the Surface Pro 2.  I found my wife's Surface RT to be an amazing machine it does a lot stuff, but as it will not runn those two programs I will have to move to the Surace Pro Two.  Why would I want to do all this.  I need something I can do all my work on and take with me and not have to tranfere stuff back and forth, the note book is to heavy to keep carrying.  AND when I finally find it time to change my iPhone 4 (which I paid 650 for when I got it in 2010 so I am not ready to toss it yet) out I'll get the Windows phone as it  and the Surface can keep each other upto date via Skydrive. 

 

To bad GM screw up its marketing on the Volt.  They made the same mistake in only pushing the electrica aspect of the it which left the people worried about running out of power.  They should have said right up front that the Volt had a gas generator on board to keep the thing charged.  Had they done that the Volt would have sold more.
Greenleaf
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Greenleaf,
User Rank: Strategist
2/28/2014 | 4:24:12 PM
Re: Not just for touch.
Anyone who has used Windows 8/8.1 knows that it behaives a bit schizophrenically. I believe that trying to add touch to an operating system which wasn't made for touch was the problem with Windows 8. In order to have a smooth experiance an operating system needs to be designed from scratch. Microsoft did not have that luxury to do that because they had to carry their legacy software with them. Because of this Micosoft's OS now looks buggy with some applications responding to touch while others do not. Furthermore, third party applications which we made before Windows 8 don't work very well on Windows 8 so Microsoft broke a lot of legacy software with Windows 8. I believe that Windows 8 was a rush job to get Microsoft in the tablet game faster but I believe it over all hurt Microsoft and got Ballmer fired. 
danielcawrey
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danielcawrey,
User Rank: Ninja
3/1/2014 | 1:37:27 PM
Re: Not just for touch.
My impressions of Windows 8 have been that they should have developed more than one version. They should have had a touch and a non-touch system. The way that they clumped everything together was problematic.

Imagine, for example if you did not buy a touch device that had Windows 8? 
mak63
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mak63,
User Rank: Ninja
3/5/2014 | 5:42:23 PM
Re: Not just for touch.
@ danielcawrey
I might agree with you. But what I tell my clients & friends is that they will better off thinking that Windows 8/8.1 is a dual system. One for touch, but it still can be used with mouse and keyboard and the regular desktop. They seem to accept the idea. I don't hear much complains about it after that.
Michael Endler
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Michael Endler,
User Rank: Author
3/6/2014 | 5:26:59 PM
Re: Not just for touch.
That doesn't surprise me, mak63-- I think that's a sensible way of looking at Windows 8.1 actually offers, as opposed to what it doesn't. But if customers are generally content after having some context realignment, why is the OS still struggling so much? Do you find that Windows 8.1's benefits, such as they are, just aren't persuasive enough to justify more than targeted deployments? Just curious about your experience.
mak63
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mak63,
User Rank: Ninja
3/8/2014 | 5:52:27 PM
Re: Not just for touch.
@Michael Endler

Yes, the benefits (with the current peripherals, e.g. regular monitors) are not persuasive enough. Well put.

When you also add the price (more than a hundred bucks for Windows 8 + a new monitor), Windows 8 doesn't look so attractive. This is, at least, my current situation.

There are two more related issues that explain the slow adoption of the new OS,

One is the stability and reliability of Windows 7. Computers with 7 are good computers, capable of running pretty much everything you throw at them.

The other is the transition from 7 to 8; which is different than that from Vista to 7.

My personal experience with 8 is a mix bag. I have used it and repair computers with it. Suffice it to say, without a proper monitor, I'll wait for Windows 9.
mak63
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mak63,
User Rank: Ninja
2/28/2014 | 4:47:39 PM
Re: Not just for touch.
@mikemuch
Another thing I'm tired of hearing is that no one wants a touch-screen on a desktop or laptop.
I couldn't agree with you more. It's getting old, isn't it. Perhaps people who hate touch devices never touch one. (pun intended)
shakeeb
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shakeeb,
User Rank: Apprentice
2/28/2014 | 9:15:32 PM
Re: Not just for touch.
mak63, I agree with you for some extent. Having touch screen on your laptop will make the life miserable for the user depending on the work they do. But if you have the best practice it will be a nice to have feature.
moarsauce123
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moarsauce123,
User Rank: Ninja
3/1/2014 | 8:40:51 AM
Re: Not just for touch.
I think there is no future for touch on the traditional desktop setup. That said, I do like touch on mobile devices. Touch works there and is a necessity to keep device sizes small. Mobile devices being mainly used for consuming content do not need keyboards. That changes once even light editing is a more common need, the soft keyboards on the screens are not only horrible to type on, they also use up too much screen space which on mobile devices is the biggest premium.

The traditional desktop has a monitor that is mounted upright on top of the desk (thus desktop). Using touch on this traditional setup means reachoing out to a monitor. While that may be fun and functional for the casual action, it is very fatiguing. Besides that, no desktop touch implementation is complete as there is still a need to use mouse and keyboard. If touch on the desktop is to make sense, then it needs to replace mouse and keyboard entirely. Even then, there are drawbacks. The mouse is a much better pointing device than a finger. The small mouse pointer also does not obstruct the screen as the big hand does. With the higher resolution and better accuracy there is also no need for big hunky tiles and buttons that provide plenyt of landing space for fingers.

Let's assume there will be an OS that overcomes all these things, we still have a lot of work to do here. In order to make touch on desktops ergonomical we need to take out the saws, cut holes into our office furniture, and mount the touch monitors into the desktop surfaces at the correct angle. Since touch UIs need to have much larger controls we desperately need at least two monitors just to be able to display what we currently can display. Ideally, a third, specially crafted multi-purpose monitor needs to be mounted that is mainly used as text entry device. If it is to mimic a keyboard (after all, we developed tremendous skills in using keyboards) the special monitor needs to provide tactile feedback. That technology already exists.

OK, so we need to buy more expensive monitors, have to replace all applications so that they all have a touch enabled UI, we have to cut our office furniture into pieces or buy new, and we need an OS that properly supports all that. So in order to make touch usable on the desktop everyone has to spend hundreds if not thousands of dollars to just get back to the current productivity levels that can be accomplished with a traditional keyboard and mouse and a cheap upright monitor...and all that to accomplish the exact same stuff as we do now!!

Yea, sure, touch on desktops is a real winner!
mak63
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mak63,
User Rank: Ninja
3/5/2014 | 6:46:00 PM
Re: Not just for touch.
@ moarsauce123
Why future desktops can not be a combination of touch, voice input and mouse/keyboard?
People can use any input as they say fit. I know mouse/keyboard won't go anywhere anytime soon, but neither does touch enabled systems.
Actually, I imagine a future where more and more hybrids and tablets will replace current desktops. Don't you agree?
So in order to make touch usable on the desktop everyone has to spend hundreds if not thousands of dollars
I disagree with that. Touch screen monitors have been around for a while. They shouldn't be so expensive.
In fact, you can find a 23" touch screen monitor for 150 bucks. That's really not bad.
Also, people or business won't spend a lot of money in modifying furniture to accommodate a computer. They will be better off buying a hybrid or a tablet (with a wireless keyboard and mouse if they think it will be necessary)



ricegf
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ricegf,
User Rank: Guru
2/28/2014 | 11:03:20 AM
The Elephant in Microsoft's Living Room
The elephant in the room, not mentioned in this enthusiastically optimistic story, is Microsoft / Nokia's introduction this week of 3 new Android phones. While the announcers tried to put on a brave front as to how this would "drive more volume to Microsoft services", it's pretty much an admission that they need Android to compete in the high-growth emerging market segments - in effect, the (very nice) Windows-based economy phones just aren't cutting it.

This is further evidenced by the actual market research, which shows that while Windows smartphones show promising growth rates as a percentage of market percentage (!), both Android and Apple sold a lot more additional phones than Microsoft / Nokia (the article hints at this quite gently). In effect, the math tricks hide the actual dismal state of Windows mobile product sales, to which the slow growth of the Windows application store attests.

And then there's Chrome OS's incredible surge in the 4th quarter (as every major laptop vendor introduced new Chromebook models), and utter domination of such bellweathers as the Amazon laptop bestseller list (4 of 5 are now Chromebooks, not Windows 8 laptops). This only adds to Windows 8's dismal failure in the desktop and laptop market. As XP's long delayed demise finally arrives only 5 weeks hence, XP still has a far larger installed base than 8.

Microsoft almost certainly has several more years of locked-in rich corporate "software assurance" revenues on which to subsist, not to mention their patent fees extracted from Android vendors under threat of massive legal action, which to date has kept their balance sheet looking healthy. Unfortunately, BYOD threatens to tip even corporate income into a death spiral, as when people bring their own devices to work, they tend to buy what they use at home, where Android and Apple reign and Chrome OS shines - which may leave Microsoft as a mere patent licensing and litigation shell of its former self in a few years.

The monopoly has clearly cracked, and competition has returned to computing. Finally.
rradina
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rradina,
User Rank: Ninja
2/28/2014 | 11:27:07 AM
Re: The Elephant in Microsoft's Living Room
Competition restored?  Maybe.  We might just be witnessing a passing of the torch to a new monopoly.
ricegf
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ricegf,
User Rank: Guru
2/28/2014 | 12:12:40 PM
Re: The Elephant in Microsoft's Living Room
Yes, you're exactly right - with 81% of the worldwide smartphone market, Android is looking suspiciously like a monopoly-in-waiting on its own. I'm not really a proponent of Windows as a reaction, though - they already had a desktop monopoly, and that didn't end well.

Fortunately, we have several recent Linux-based challengers from which to choose - Firefox OS is shipping from several vendors on low-end phones, Jolla (the guys who bolted from Nokia when they switched to Windows) just began shipping a well-received mid-range smartphone from Finland colloquially known as The Other Half (cool hardware!), Canonical just announced two Ubuntu-based phones that will ship late this year, and Samsung has announced an actual Tizen-based phone and smartwatch after several delays.

If you're concerned about Android becoming a monopoly, I'd suggest supporting one of these products - but the price is that none of them are yet as polished as Android or iOS.

Personally I'm fond of Ubuntu, as they have a cleaner convergence story that anyone else I've seen. YMMV, of course - but if you're concerned about Google's growing market dominance, do consider voting with your dollars for ABA (anyone but Android).  ;-)
Lorna Garey
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Lorna Garey,
User Rank: Author
2/28/2014 | 1:10:00 PM
Re: The Elephant in Microsoft's Living Room
Exactly - meet the new boss, same as the old boss. Or maybe not the same - at least MS is a known quantity.
Laurianne
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Laurianne,
User Rank: Author
2/28/2014 | 2:43:14 PM
Re: The Elephant in Microsoft's Living Room
Thanks for bringing up the Nokia angle. We covered that news, too. See this article
ricegf
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ricegf,
User Rank: Guru
2/28/2014 | 3:33:24 PM
Re: The Elephant in Microsoft's Living Room
We know some differences, of course. Microsoft's OS is based on a proprietary kernel, while Google's is open (Amazon, Microsoft / Nokia, Samsung, etc. have based products on it). Microsoft requires vendors to pay licensing fees for both their product and (through threat of lawsuit) Google's, while Google charges for neither. Microsoft's profits come from these licensing fees, while Google's come primarily from advertising. We also know some similarities. Both collect reams of personal data with which to personalize your experience (and to monetize). Both seek to license their products to third parties while also branding similar items themselves. I've used both products, but I'm more inclined to use Google at the moment - largely because of Microsoft's heavy-handed license enforcement. However, I'm even more inclined to explore other options, just to keep Google and Microsoft (and Apple) honest. ;-)
funkydow
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funkydow,
User Rank: Apprentice
2/28/2014 | 4:24:41 PM
Understating the threat to Microsoft
I think you have understated the threat to Microsoft: "Samsung is the only Android OEM that really makes much on devices. It's a problem with emerging-market domination. High volumes of low-margin devices don't necessarily translate to a lot of profit." Last quarter, Apple and Samsung accounted for 120% (sic) of net profits in mobile devices. That means all other competitors are not making "a lot of profit," rather they are losing huge amounts of money, more than 30% of net sales. Microsoft has deep pockets but giving away devices at a loss is not a strategy for success, at best it's survival until they find new markets or hope Apple and Samsung vanish. I don't think they have more than a couple of years before their mobile strategy has to be terminated. Perhaps they will find some very supportive enterprise partners who are willing to force their devices on unwilling employees. 
RobertT901
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RobertT901,
User Rank: Apprentice
2/28/2014 | 4:48:55 PM
IT Dinosaur
Having used almost every flavour of Microsoft's OSes (DOS, 3.1, 95, XP, NT, 2000, 7), I find myself increasingly wary of MS's products. I don't get more proficient in using it, especially the more recent iterations. I feel like a newbie, and my reaction to 8 is akin to a completely strange new product. I am still a heavy user of 7, and that's because some software I need to use have no Mac versions. In a sense, I've become an IT dinosaur.
mak63
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mak63,
User Rank: Ninja
2/28/2014 | 5:09:37 PM
title
I like the title of the article: Microsoft's Windows Strategy: A New Hope. What's next, The Empire Strikes Back?
moonwatcher
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moonwatcher,
User Rank: Strategist
2/28/2014 | 7:05:22 PM
Windows 8.1: A New Hope
"The update coming this spring appears to still lack a Start menu, which will disappoint desktop users."

Then it will be a NON-STARTER for many users...pun intended, but VERY TRUE. What we desktop users who do real work want is for Windows 8 to look like Windows 7 (why throw out that nice Aero interface right when low end graphics cards can do it justice?), and have a freaking START menu that we've all become accustomed to over the last 13 years. It isn't that they couldn't do it to please users, its that Microsoft doesn't give a crap about their users...Well, maybe users should return the favor...
Joe Stanganelli
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Joe Stanganelli,
User Rank: Ninja
2/28/2014 | 11:06:08 PM
Diversification FTW
Re: "IDC projects Windows platforms will account for 7% of the smartphone market in 2018 and 10.2% of the tablet market in 2017. In both cases that's a distant third behind Android and iOS. Predictions like these demonstrate why some Microsoft critics resist the company's device ambitions."

Rome wasn't built in a day.

This is the sort of thing people that worried critics about Apple when Android overtook iOS.

I'm also wary (and weary) of Microsoft critics saying that MSFT needs to get out of everything except it's "core business" -- including XBox, Bing, etc..

Could you imagine Google shareholders calling on Google to stop doing everything except search?
Michael Endler
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Michael Endler,
User Rank: Author
3/6/2014 | 5:36:17 PM
Re: Diversification FTW
I don't think it's quite like Android overtaking iOS. Apple's hardware margins are the envy of all device makers, and it milks more ecosystem profit than anyone. A company with that sort of control over lucrative customer segments can afford to let Android eat up low-profit market share. Microsoft, on the other hand, has no significant mobile presence, and the tablet market is maturing even faster than the smartphone market did. I think it's unfair to call Windows 8.1 a useless product or an unmitigated failure-- but I also don't think Microsoft can afford to let it grow organically at its current pace. In the enterprise, both the Windows OS and Microsoft services are fairly insulated, but in consumer/BYOD markets, Microsoft will have to negotiate how much revenue comes from Windows itself, and how much comes from cross-platform services that are decoupled from the OS.

I agree, though, that Microsoft gets way too much pressure to dump Xbox and Bing. Both are already valuable in certain ways, and each offers too much potential to discard.
AsokS489
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50%
AsokS489,
User Rank: Strategist
3/9/2014 | 2:05:15 PM
Windows 8.x is dead.
 

When the person who takes your order at Wendy's mentions that they've heard bad things about Windows 8, you know the game is over.
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