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Windows 8: Microsoft’s potential problem child

Having been caught on the back foot, Microsoft is finally showing its hand with its latest Windows, Office and new tablet PC offerings. But is it too late?

With the imminent introduction of Windows 8, Microsoft is taking a massive gamble on territory that is already being divided up by powerful competitors, including (most notably) Apple and the Android bloc. It is obliged to do so because never before in its history has it faced such a clear and present threat to its most prized business divisions. Those divisions are Windows and Office, and the threats come courtesy of the surge in interest in tablet and cloud computing. The question for resellers is: just what sort of an opportunity is presented by the new operating system?

Unfortunately, while the answers to that question are far from clear, early indications are not particularly good. Windows 8 may have many redeeming features, but history has shown that when Microsoft makes major changes to its desktop operating system, time is what’s needed to let things settle down.

While early reports laud Windows 8 for its performance, others are critical of the abandonment of established methods of interacting with Microsoft operating systems. By introducing a variety of touch- and gesture-based interfaces, there is concern that ‘unlearning’ old ways and relearning new ways of doing things will be necessary. In the office, that means an impediment to productivity.

Within this context, the problem is that the market is changing so fast today that time is the one commodity Microsoft does not have.

 

DEEPER THAN THE SURFACE

Microsoft’s Surface (its own venture into producing a tied-together hardware-software tablet) is arguably the pivot on which the success or failure of Windows 8 will turn. That’s because Windows 8 is designed around touch, a major departure for Microsoft; indeed, when it introduces the ‘full’ Intel Surface in 2013, the company will arguably redefine the meaning of ‘ultrabook’. Microsoft has to get into the tablet market because it is rapidly cannibalising the sales of PCs and notebooks, presenting an increasingly viable threat to the desktop operating system.

However, the Surface goes up against Apple’s phenomenally successful iPad and a collection of vendors that have formed around Google’s Android. This is not easy territory – other pretenders have come and, in HP’s case, just as quickly gone. Others, like Research in Motion’s (RIM) PlayBook merely linger.

The HP TouchPad was launched on 1 July, 2011…and discontinued in August that same year. From an initial price of US$500, a few weeks later it was difficult to give the things away. The PlayBook fared slightly better, but is still a horror story for beleaguered RIM. Introduced in April 2011, the device sold so slowly that RIM took a US$485-million hit. By March 2012, just one million of the gadgets had found their way into the hands of end users, ‘commanding’ a little over three percent of the total tablet market. RIM hasn’t abandoned the PlayBook yet, clinging tenaciously to the device. While it does so, Apple has sold some 55 million iPads.

 

CONSUMER-SAVVY

But what’s this to do with Windows 8? Quite a lot, actually. It demonstrates the competitiveness of the tablet market which has, for even those hardware manufacturers with venerable reputations and quality products, proven a notoriously hard nut to crack. It’s made harder for Microsoft by some further observations. Notably, on the fleeting career of the HP TouchPad, the company’s CTO Shane Robison said the gadget “was half a generation or a generation behind the iPad and so that wasn’t going to drive volume.”

The Surface is three or four full generations behind Android and Apple in what has proved to be a punishing market for the likes of RIM and HP. Indeed, Apple commands around 70 percent of the market while all other competitors combined fight over the balance.

Windows-powered tablets are not unknown,either, but Windows 7-powered tablets have proven spectacularly unsuccessful – expensive, heavy, with designs limited by an operating system made for an altogether different device, and a million miles away from the app stores and ecosystems that make Apple and Android tablets so attractive to consumers.

The Surface, however, is a brand-new device, with a brand-new operating system, from a software, not hardware, manufacturer – and one with a history of buggy operating systems to boot. Indeed, when Microsoft makes major changes to its desktop operating systems, ‘don’t implement until at least service pack 1 is out’ is considered sound advice.

 

HIGH STAKES

By now, the risks should be obvious, in terms of likely consumer reception. But it is the enterprise market that is of most interest to resellers.

Microsoft’s success in this environment in part rests on its own ecosystem of OEMs; it makes the software, the OEMs make the hardware (yes, that is a dramatic oversimplification). Those OEMs include HP, Asus, Acer, Dell, Samsung and many, many more.

The risk faced by Microsoft – and, by extension, resellers – ratchets up even further as with the Surface, it is now in effect competing with its OEM partners. It has an ace up its sleeve: these OEM partners are all hamstrung by a licence cost (for Microsoft’s operating system) that it doesn’t have to bear itself. Acer’s Chairman JT Wang has already voiced his disapproval, asking Microsoft to ‘think twice’ about its Surface plans.

In other words, the introduction of the Surface and Windows 8 might just present more of a threat to Windows as the de-facto desktop operating system. HP and Acer are not among the Windows RT launch partners.

So, what about the opportunity presented to resellers by the Surface itself? Certainly, the device has some appeal – but, perhaps astoundingly, it is expected not to sell through the channel, but instead through Microsoft’s own retail stores and its own online presence. Just how quickly – or even if – Microsoft SA will setup stores in South African malls remains to be seen. At the time of writing, the vendor has no local spokespeople to answer such questions.

 

Enter the cloud

Concurrent with the development of Windows 8 and the Surface, Microsoft is accelerating its entry into the cloud with Office 365. The reason for this is clear: tablet computers plus cloud services make for a great value proposition for consumers (and remember the Bring Your Own Device trend – consumers are now setting the agenda). That value proposition offers quite the threat to Microsoft’s most treasured business divisions, Office and Windows.

Google’s Android and its various other services, like Gmail, Docs and Drive, add up to a pretty handy and totally viable set of applications to do exactly what Office and Windows do for you. For the home user, that means pretty much no overhead outside of the hardware to get yourself up and running.

In the office, products like Docs and Gmail are being used by a growing number of companies; it is a billion-dollar-per-annum business for Google.

Questions are inevitable around how well Microsoft can respond. Again, issues of maturity in comparison to the competition must be raised. However, at last, there is good news here: recognising the value that the channel adds, and possibly in a concession to the competence of what it is up against, in August, Microsoft announced that fees would go up to 18 percent on sales, with a healthy 23 percent for deals upwards of 2 500 seats.

Essentially, with Windows 8 and Office 365, Microsoft is responding to the challenges of Apple and Google by trying to turn its existing products into cloud-based, touch-driven products. However, shoehorning often has undesirable results. Writing on zdnet.com, technology journalist Adrian Kingsley Hughes says: “The claim that the Windows 8 learning curve ‘is going to be steep’ should set off alarm bells in the heads of anyone thinking of deploying Microsoft’s new OS in an enterprise environment.”

 

Generations

As for ‘generational changes’ in software, which is what Windows 8 represents, Microsoft has a poor record, most recently with Vista. Worth bearing in mind, too, is that Microsoft is only now ending support for Windows XP – an operating system more loved (and arguably more venerable) than Vista. Windows 7 is an excellent product, stable, dependable and fit-for-purpose. Given the tenacity with which business has hung on to Windows XP, it is arguable that Windows 7 will enjoy the same loyalty.

Windows 8, the Surface and Office 365, therefore, present something of a mixed bag and a host of unknowns for the reseller channel. These unknowns must be considered in the light of an industry that is changing fast.

While the smart money says Microsoft will eventually get it right, the even smarter money knows there are proven alternatives available for desktop business computing – some from Microsoft itself.

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