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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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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...
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?
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 | 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)
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. 
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. 
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.
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. ;-)
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
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.
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