Software // Operating Systems
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7/22/2013
11:17 AM
Michael Endler
Michael Endler
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Microsoft Windows 8 Has No Time To Waste

Following disappointing Q4 earnings, Microsoft CFO Amy Hood said the company's reinvention will take time. But Microsoft lacks that luxury.

10 Hidden Benefits of Windows 8.1
10 Hidden Benefits of Windows 8.1
(click image for larger view)
On Thursday, Microsoft announced earnings that missed Wall Street estimates by the largest margin in a decade. Windows 8 and Microsoft's Surface tablet headlined the disappointing earnings, which prompted CFO Amy Hood to remark, "We have to do better."

Indeed, Microsoft needs to do better and customers need to see the evidence sooner than later.

Hood said the process will take time, but with Windows 8, the company might not be in position to be patient. If the company's recently announced restructuring doesn't start paying off within the next several months, the obstacles standing between CEO Steve Ballmer and his "one Microsoft" vision will only grow taller, and in some cases, become insurmountable.

Ballmer wants Microsoft to be more collaborative, and to produce products that enhance one another. This kind of cross-divisional cooperation is something with which the company has so far had mixed success.

[ Need Windows 8 apps? Read 8 Free, Must-Have Windows 8 Apps. ]

Azure and Office 365 have reinforced one another, for instance, but Microsoft has struggled to use Office to promote Windows 8. The company has declined to release Office for the iPad in an attempt to make Windows 8 and Windows RT tablets more attractive, but so far, only niche users have embraced the Modern UI. Apple, meanwhile, continues to sell millions of iPads.

In a Friday blog post, Forrest analyst J.P. Gownder noted that if only 10% of iPad users are willing to pay $100 for Office, Microsoft would book $1.4 billion in revenue, more than enough to wipe away the massive Surface write-down that the company reported on Thursday. As the unsold Surface inventory attests, Microsoft seems to have overestimated consumer demand for tablets that run Office.

Perhaps once Windows 8.1 hits, that demand will solidify, but in the meantime, Microsoft's strategy is not working.

Microsoft is committed to the Modern UI as the core of its future, so it's not surprising the company is willing to take short-term losses in the pursuit of long-term gains. But there's always a tipping point. Microsoft isn't there yet, but if Windows 8 doesn't start performing, especially with consumers, Ballmer will be forced to compromise his plan.

Microsoft is not on the brink of disaster. The company continues to own the enterprise market, and several of its fledgling projects should prolong that dominance for years to come. The reorg could potentially help these newer projects along.

Bing has lost billions, for instance, but its potential as a development platform is fascinating and far-reaching. Ballmer talks about Windows apps that understand a user's context and needs, and with Bing's intelligence and Internet-spanning reach riding along Azure's backbone, developers might be able to create this vision.

Though this sounds great, certain portions of the market, namely consumers, aren't going to wait around for Microsoft's next-gen apps to materialize. If Microsoft finally has a compelling mass market product by the fall, that will be one thing. But if the company is 12 or 18 months away from being truly competitive, that's another story. Microsoft is already playing from behind, and at some point, the deficit will become almost impossible to surmount, barring a genuinely disruptive new product or a major misstep from Apple or Google.

Following Thursday's earnings report, Microsoft value shed $32 billion. The 11% decline represents the biggest single-day sell-off of Microsoft stock in more than a decade. Steve Ballmer is accustomed to stockholders treating him like a punching bag, of course. But what if Windows 8 is still in disarray after the holiday season? What if businesses that use Windows XP users don't accelerate their migrations? What if most of these businesses stick with Windows 7, leaving Microsoft without a strong presence in the enterprise tablet market?

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thehinac
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thehinac,
User Rank: Apprentice
7/22/2013 | 6:34:13 PM
re: Microsoft Windows 8 Has No Time To Waste
When setting up a Windows 8 user for the first time on a PC or tablet, just give the option (Start Menu "Windows 7 style" or Metro Interface) and watch the sales go up. I'm a network admin for the company I work for. Umm... Most people do not have touch screen monitors at their desks and don't administrate systems from a tablet. Even if our company were to ever move to windows 8, we'd have to buy a 3rd party start menu program for the transition. We have one server running 2012. It's such a pain to navigate that it's more of joke than an interface. Thus 40+ copies of 2008 R2 running verses 1 copy of 2012 with nothing important on it. Oh and it has Startisback installed on it now. making a 70% improvement. It's easy, when Microsoft makes a new product give it to 3rd graders to play with. If they complain then fix it. Then fire who ever said it was a good idea. :D thehinac
DonaldD113
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DonaldD113,
User Rank: Apprentice
7/22/2013 | 7:07:08 PM
re: Microsoft Windows 8 Has No Time To Waste
Heh... Tech writers have the attention spans and foresight of three-year-olds.
Jack N FranF583
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Jack N FranF583,
User Rank: Apprentice
7/22/2013 | 8:15:06 PM
re: Microsoft Windows 8 Has No Time To Waste
Two things: 1) It's not BYOD to work, its BWDH so I (your boss) can contact you 24/7 to work on my problems. The users who have been 'blessed' with closeness to their bosses have had the their Bring Whatever Device Home have been answering short and long messages from where ever they happen to be.2) heal thyself MS/Office Apps by merging Bing into Word, EXCEL and PowerPoint.
ggiese87101
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ggiese87101,
User Rank: Apprentice
7/22/2013 | 11:11:20 PM
re: Microsoft Windows 8 Has No Time To Waste
Another article recently stated that the drop in x86 desktop/laptop PC sales isn't Intel's fault, but it's Intel's problem. Intel's chips (and AMD's, too) are powerful but Microsoft has done little on the PC platform to take advantage of it, and and in the process has looked "lame" compared to tablets and smartphones. Two things need to happen, IMO. Microsoft needs to "give in" and make it's software cost-competitive, ultra-responsive, much easier to use, and it needs to eliminate legacy compatibility that slows it down so it can release new versions quicker. This means supporting Windows 7 and/or Windows 8 long-term but cutting the cord on new versions. The other thing that needs to happen is for Linux vendors to merge or for a larger player to buy several of them and invest the resources necessary to create a low-cost, easy-to-use, consumer-friendly version of Linux that is capable of competing with and beating Microsoft on features, not just price. I would love to see Dell do this, or for HP to create a subsidiary that doesn't use the HP brand but uses HP hardware (like a whitebox-style vendor) and exclusively sells the Linux distribution (also non-HP branded). Google Chrome could go this direction but Google isn't investing enough in it nor is it working closely enough with a software vendor ecosystem like Microsoft does nor is it supporting offline usage enough to make it general-purpose. The funny thing is that tablets are becoming a commodity market and may not generate the long-term returns that the vendors would like, but upmarket PCs could be profitable and innovative if they can solve a few key (mostly software) issues that are holding it back.
Curtis Quick
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Curtis Quick,
User Rank: Apprentice
7/23/2013 | 7:42:58 AM
re: Microsoft Windows 8 Has No Time To Waste
Things are not always what they seem on the Surface!
I bought my Surface RT six months ago at the original price and have found it worth every penny since. My Surface RT does many things my android and Ipad tablets could not even hope to do. The issue here is not a good product, but bad marketing into a toxic marketplace. Good marketing can make rotten apples look like gold, while bad marketing makes even gold look like spoiled garbage. Sadly, Microsoft had to sacrifice Surface RT to ensure a future for Windows 8 with their hardware partners.

If Surface RT proponents at Microsoft had had their way, Surface RT would have sold for around US$200 from the outset and been the loss leader to gain marketshare (good) - and alienated their hardware partners into not supporting Windows 8 (very bad). So, instead, to appease hardware partners, Windows proponents convinced MS to keep the Surface RT price high (bad) to make sure they did not undercut their partners (good). MS further restrained Surface RT sales by making it nearly impossible to purchase one. I know, I live in Taiwan and I had to go to San Francisco to purchase one.

Make no mistake, Surface RT users know the value of their tablets and love them; those who don't own one have been taught to dismiss them by the status quo.
melgross
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melgross,
User Rank: Ninja
7/24/2013 | 1:48:35 AM
re: Microsoft Windows 8 Has No Time To Waste
That's a very hopefully post. But much of it isn't true. There is little to recommend RT. while you may be happy with it, most people will find Android or iOS tablets to be more than good enough, and the far greater sea of software give them much greater choice.

While the RT might be better at a much lower price, it's not likely that there are people at Microsoft who wanted it to come in at $200. This is a supposition on your part. The concept from Microsoft was to co e out with tablets that equaled the iPad in quality, something that no current Android tablet can make claim to.

Microsoft is not in the business of making cheap me too hardware at this level. These aren't cheap keyboards and mice!
Paul987
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Paul987,
User Rank: Strategist
7/24/2013 | 12:16:42 PM
re: Microsoft Windows 8 Has No Time To Waste
"As the unsold Surface inventory attests, Microsoft seems to have overestimated consumer demand for tablets that run Office"

I don't think this is entirely, or necessarily, true. Tablets with full fledged OS's capable of running all your existing desktop apps have clear advantages over iOS and Android devices. Where Microsoft seems to have gone wrong was:

A- the half-baked UI that is Metro/Modern. Sure, it's better on a touch device than it is on a desktop, and it has potential, but for the time Microsoft had to work on it, it's been shockingly primitive with huge and numerous usability issues.

And B- Ridiculously overpricing their devices. Microsoft is the one who's coming from behind. They're the one who needs to make headway in the mobile market. They're the one with the unproven product(s). Yet somehow they thought that they could command higher profit margins than even Apple. $600 to $800 for an RT tablet is simply insane. $1000 to $1100 for a Pro tablet is absurd.

And I'm not sure I buy the argument that they priced the devices high to avoid issues with other OEMs. Pricing them so high as to be commercial failures sends the message that consumers aren't interested in Windows mobile devices. Also, accessories like their keyboards have been priced astronomically high as well. Is Microsoft worried about offending Logitech or something? No, they're just arrogantly convinced that their products are THAT good. They're not. Give me a $300 RT tablet *WITH* keyboard cover and I might be interested. Give me a $500 Pro tablet *WITH* a keyboard cover and I'll buy one immediately. But if I'm spending upwards of $1000, there are a lot of far more compelling devices out there.
Paul987
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Paul987,
User Rank: Strategist
7/24/2013 | 12:25:18 PM
re: Microsoft Windows 8 Has No Time To Waste
CurtisQ901 said: "If Surface RT proponents at Microsoft had had their way, Surface RT would have sold for around US$200 from the outset"

There's a problem with this suggestion - Microsoft had no hardware partners to offend with accessories like their Touch and Type covers, yet they priced them similarly insanely high. They could have chosen to sell keyboards at, or just above, cost (which has been estimated to be in the $20 range), but instead priced them at $100 and $120. That speaks to them being simply out of touch as to what people are willing to spend, and the value of their products.

You might be entirely satisfied with your Surface, and that's great, but the Surface line has clearly been a commercial failure to this point.
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