Windows 8 Is Microsoft’s Riskiest Bet

Microsoft is making a huge gamble that people will learn to love Windows 8’s new, tile-centric interface.

Now that Windows 8 has reached its RTM (Release to Manufacturing) milestone, the inevitable question presents itself: just how well is the operating system going to perform on the open market?

One of the biggest potential hindrances to Windows 8 becoming a massive hit is the Windows franchise itself. Back in 2009, there was a good deal of pent-up demand for a new Windows operating system: by that point, Windows XP had been on the market for nearly a decade, and Windows Vista had met with fierce criticism from some quarters. Windows 7 turned out to be a hit, selling millions of copies and flooding Microsoft’s Windows division with revenue.

Thus the problem facing Microsoft: How to convince Windows users to rush out and buy an upgrade of a perfectly good (and relatively new, at least by Windows standards) operating system? Compounding the issue is the new Windows 8 design, with a Start screen that discards the traditional desktop interface in favor of a bunch of colorful tiles linked to applications. That revamp is supposed to make Windows 8 more touch-screen friendly, and thus optimized for tablet use; but it could turn off consumers who don’t like change, not to mention businesses that shudder at the idea of retraining their workers in new ways of doing things.

Indeed, Microsoft seems to have pinned its hopes on Windows 8 as primarily a tablet operating system, perhaps betting that will help push back against Apple and Google in the mobile space while Windows maintains its market-lock on traditional operating systems.

The company recently unveiled Surface, a Windows 8 tablet with a cover that doubles as a keyboard. Built in-house (much to the ire of some of Microsoft’s longtime manufacturing partners), the device could retail for as little as $199, at least if you buy into the highly questionable rumors floating around. Given Windows 8’s feature set, a well-made device at that price could offer serious trouble to Amazon’s Kindle Fire, Google’s Nexus 7, and even Apple’s iPad.

But if Surface and the other Windows 8 tablets fail to make an impact on the market, then Microsoft will have lost a major chance at seizing the new paradigm, which is centered on mobility and the cloud. Meanwhile, that same paradigm shift is drifting the center of peoples’ computing lives from desktops and laptops to smartphones and tablets—which puts Windows’ traditional center of strength at long-term risk.

And despite Microsoft’s recent forays into the cloud (notably with products such as Office 365 and Azure), Windows still represents one of the company’s chief revenue pillars. If that starts to crumble, there will be very serious repercussions in the hallways of Redmond.

Microsoft seems to realize the stakes. In October 2010, Microsoft CEO Steve Ballmer told the audience at the Gartner Symposium in Orlando, Fla. that the next version of Windows represented the company’s riskiest product bet. Watch for Microsoft to try to tip the odds in its favor with an enormous marketing budget, along with full shelves of new, shiny Windows 8 devices.


Image: Microsoft

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