Microsoft’s Gamble

by Dave Schuler on November 20, 2012

I had another, much longer and better-researched post in the works on this subject in the works but I’ve decided just to let ‘er rip and post a few random thoughts on subjects touching on Microsoft’s most recent operating system product offering, Windows 8:

Windows 8′s sales are worse than Windows 7′s were at the same time in its lifecycle—unless they’re higher. They’re also apparently worse than internal Microsoft estimates. But what those estimates are is anyone’s guess. Truth is, we don’t really know and we won’t for some time. But combine the new operating system with the continuing conjecture over former Windows Division president Steven Sinofsky’s departure, and you’ve got some great headlines.

The first mutterings about poor sales came in the aftermath of Sinofsky’s demise, with incredulity that he’d be let go so soon after Windows 8′s launch unless sales were catastrophic. Bad sales are plausible, too, after reviews of Windows 8 were decidedly mixed. The operating system, at best, seemed deeply polarizing.

Surprisingly, the first talk of sales numbers was positive: the Register reported the results in Europe were, according to channel analyst Context, actually quite good. Sales in the two weeks up to and including the October 26 launch of Windows 8 were up 7.8 percent year-on-year, and about a quarter of these machines shipped with Windows 8. Windows 7 was only installed on 17.1 percent of machines sold in the equivalent time period around its launch. Context also noted that in spite of fears to the contrary, there wasn’t a glut of unsold Windows 7 inventory clogging the channel. In a sluggish European computer market still suffering the effects of the global downturn, that’s a pretty healthy performance.

A few days later, the news wasn’t so good. Microsoft-watcher Paul Thurrott wrote that a single source inside the company said Windows 8 PC sales were “well below” internal projections. The software maker apparently blamed the slow start on lackluster offerings from PC OEMs.

The odd history of Microsoft operating system major releases for the last 15 years or so is that every other one is a flop. Windows 98—successful. Millennium—flop. Windows XP—successful. Vista—flop. Windows 7—successful.

I honestly believe that this history has less to do with Microsoft’s design and development capabilities than it does with the conflict among Microsoft’s business plan (not to mention its revenue stream), and developers’ willingness to develop software for the new systems, and its customers’ needs. Based on the evidence I think it’s reasonable to infer that Microsoft needs to produce a new major release roughly every five years to retain its dominance and revenue stream. Also based on the evidence developers are willing to adopt new operating systems roughly every ten years.

Today’s software development world is divided into several, nearly warring camps: Apple (based, I presume, on BSD Unix), Android (based on Linux), and Windows. To my untutored eye most of the action these days appears to be in the smartphone and tablet worlds. With Windows 8 Microsoft has sought to push its horde of developers into the smartphone/tablet end of things. In doing this it risks its dominance on the desktop. Contrary to popular impression the desktop world is mature, not dead. Millions of them continue to be sold every year and will for the foreseeable future. Some tasks need mainframes. Some tasks need desktop computers. Many tasks are best-suited for handheld computers. One size does not fit all.

Firing the head of the Windows division certainly doesn’t look like a good sign. Do we have another instance of Microsoft’s major release curse? Microsoft has been remarkably agile not to mention lucky to recover from its failures. Will the company’s luck hold out and is that possible at this late stage of the game?

{ 3 comments… read them below or add one }

TastyBits November 20, 2012 at 11:21 am

Microsoft changed in the early 2000′s, and I think Steve Ballmer was the cause. Backward compatibility was sacrosanct under Bill Gates, but starting with VB.Net, it was the Microsoft way or the highway.

With Vista, Microsoft tried it again. If software or hardware was not compatible, the solution was to upgrade the software or hardware. This was not too successful, and Windows 7 included XP Mode to allow older applications to run.

I suspect Windows 8 will be a repeat of Vista, and businesses will skip it. They are planning to force users to abandon Windows XP, but I think most upgrades will be to Windows 7 instead.

Microsoft is trying to produce the huge Apple profit margins, but they ain’t no Apple.

Steve Verdon November 20, 2012 at 12:49 pm

Serious MMO players use desktops. How many MMO players are there? Millions. Sure you can play them on a laptop, but IMO the performance is sub-par, unless you spend a huge pile of cash on a laptop designed specifically for gaming.

PD Shaw November 20, 2012 at 3:59 pm

The value added with each iteration of Windows seems smaller than the one before. Skipping every other one reduces this perception, but I think the underlying reality is the same. I’m typing this on an office computer running WinXP. The computer runs (a) word-processing software; (b) internet browser(s) and antivirus software and (c) time and accounting software. We will need to update to a newer software for security reasons, to assist the software industry’s planned obsolescence model, and in order to get Win7 while its still on the market.

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