Microsoft's Dilemma: Windows 8.1 May Not Be Enough - InformationWeek

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Microsoft's Dilemma: Windows 8.1 May Not Be Enough

Microsoft CEO Steve Ballmer tells employees that Windows 8 has underwhelmed. A turnaround depends on Windows 8.1 and his reorg plan.

10 Hidden Benefits of Windows 8.1
10 Hidden Benefits of Windows 8.1
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Microsoft CEO Steve Ballmer reportedly admitted at an internal town hall meeting that sales of Windows 8 and Windows RT devices, specifically the Surface RT, have disappointed.

In a sense, the candor is refreshing, given that Microsoft has repeatedly sidestepped hard questions about Windows 8's sluggish adoption. But the statements are only new in the sense that they come from Ballmer; others have been saying the same thing for months. It's noteworthy that Microsoft's CEO spoke so frankly -- but what really matters is whether his "one Microsoft" vision is the antidote to the problem.

Regarding the Surface RT, Ballmer said, "We built a few more devices than we could sell," according to The Verge, which cited "several sources" present at the meeting. The CEO reportedly confirmed that the company's recent $900 million writedown was to accommodate Surface RT price reductions, which Microsoft hopes will stimulate sales.

The website Neowin, which was the first to publish details about the meeting, reported that Ballmer said next-gen Surface models are in testing. Recent reports have suggested the next Surface RT will run on Qualcomm's Snapdragon 800 chip, which is substantially faster than the current edition's NVIDIA Tegra 3. The new processor could also enable LTE support, which today's Surface lacks.

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Ballmer also said, "We're not selling as many Windows devices as we want to," according to The Verge. The CEO reportedly stated that limited stocks of touch-enabled devices limited the Win8 launch, and that the company is working with OEMs to provide a variety of compelling hardware options for the upcoming back-to-school and holiday seasons.

Ballmer's frank tone is notable, but no one seriously doubted that Windows 8 hasn't lived up to Microsoft's hopes.

In the past, when company execs have been questioned about Win8's viability, they've typically pointed to its 100 million license sales. These figures don't necessarily represent the number of devices that have reached consumers, however, and it's become clear, following months of declining PC sales and bleak reports about Windows 8's market share, that Microsoft was spinning numbers. If Ballmer is admitting that Win8 has struggled, he's just conceding the obvious.

And his reported statements aren't that much different than comments he's made in the past. At Build, the company's conference for developers, Ballmer also blamed Windows 8's struggles on the dearth of touch-enabled inventory available at launch. His newest remarks are a bit more direct, but disappointing sales have been implicit in his statements for weeks.

Likewise, at this point, it would be difficult for Ballmer to ignore the $900 million charge. What the CEO said is less important than whether the new $349 price point is cheap enough to stimulate sales. With the Nexus 7 poised to disrupt the low-cost tablet scene, the success of Ballmer's strategy is not assured.

It's also strange that Ballmer implicated inventory shortcomings in Windows 8's trouble while also admitting that Microsoft has more unsold Surface RT stock than it wants. After all, if consumers were so hungry for Windows 8 touchscreens, why didn't a few more of them purchase a Surface RT, which was in high supply?

This odd dichotomy could merely indicate how little enthusiasm consumers have for Windows RT. But it also reiterates a point that Ballmer didn't make: Slow Windows 8 sales involve more than hardware.

The CEO reportedly touched on this topic in only a roundabout way. According to Neowin, he said that Windows 8.1 was guided by user feedback, which obliquely references divisive reactions to the OS's current UI. It's good that Microsoft is focused on producing better devices, both internally and with OEMs. If Win8 sales take off, new tablets, convertible laptops and all-in-one desktops will be part of the equation.

But again, Ballmer still didn't address the bigger question: Is Windows 8.1 good enough? There are many reasons to think that it is, including a more polished UI, the ability to boot directly to the desktop, and deeper connections to the cloud. Then again, some users probably don't feel their feedback has been heard; Windows 8.1 brings back Windows 7's Start button, for example, but not the much-requested Start menu.

In recently reorganizing the company, Steve Ballmer has painted a compelling vision, in which Microsoft's diverse assets connect to and enhance one another, all via the cloud. In the meantime, it's interesting to hear Microsoft executives reflect on the company's struggles. More important, though, is whether the company is making the right moves to stay on top.

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User Rank: Apprentice
7/27/2013 | 5:56:29 PM
re: Microsoft's Dilemma: Windows 8.1 May Not Be Enough
Ah but Windows 8 is enough if you want to move everyone to Android!!!
Michael Endler
Michael Endler,
User Rank: Author
7/27/2013 | 5:31:32 PM
re: Microsoft's Dilemma: Windows 8.1 May Not Be Enough
Yeah, I see some of those concerns. I think it's potentially problematic, for instance, that the sub-10 inch tablets are still being sold partly on the strength of Office. I'm sure some people will be pumped to have Office on such a portable device, but a small tablet like the 8-inch Acer Iconia just isn't that well-suited for extended content creation. There's undeniable value in translating aspects of the Windows experience across devices. But the devices need standalone appeal too. By forcing Windows 8, which was designed for larger screens, onto these smaller tablets, I'm not sure if Microsoft and its OEM partners are delivering that appeal, or simply filling a perceived hole in the market. If we're going to have devices of all shapes and sizes, and screens of all shapes and sizes, then there's a good argument for form factor-optimized OSes, or at least a single OS that intelligently adapts to the kind of device on which it's being used. Currently, Windows 8 meets neither of these standards, at least not satisfactorily. Win 8.1 will do some things to improve this, though, so perhaps it will be enough, especially if device prices really do come down to competitive levels. We'll see.
User Rank: Apprentice
7/27/2013 | 5:00:29 PM
re: Microsoft's Dilemma: Windows 8.1 May Not Be Enough
Google has already started to make fun of the "One Microsoft" strategy, saying "We won't force users to run the same operating system on all devices". With microprocessors going into all sorts of products now, I don't need Windows 8 running in my toaster and needing to phone home to Skydrive before it can toast me a piece of bread.

It's true that the OS makes the product, as the decline in PC sales due to a bad Windows OS release is demonstrating. But this one-size-fits-all idea that the Windows 8 touch OS will work on everything from smartwatches to multi-screen workstations just ain't going to work.
User Rank: Apprentice
7/27/2013 | 2:41:07 PM
re: Microsoft's Dilemma: Windows 8.1 May Not Be Enough
I'm not surprised by this I have a netbook which I have used for 5 years it finally died after the keyboard was unresponsive. It was still cheaper for me to buy a netbook from Ebay the exact same model for 150 which is about 3 times as cheaper then what these tablets are priced at.

Also I have been looking around on popular sites and I've seen android tablets going for 80 to 100 dollars while the mid-end Samsung ones go for around 200-250. These things don't have a keyboard or room so its a waste for most people with limited storage being the main tradeoff.

Still if the RTs were priced competitively instead of competing with the Ipad Microsoft would of been successful selling them.
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