Everything is riding on Windows 8

As Microsoft kicks its global Windows 8 launch into high gear today, one thing is abundantly clear: a significant chunk of the company's future rides on it.

Windows 8 isn't a simple feature-enhanced update to everything that's gone before. It's being introduced at a time when worldwide PC sales are shrinking, with IHS iSuppli projecting sales of traditional desktops and laptops this year will fall 1.2% - its first year-over-year decline in over a decade — to 348.7 million. Worse for Microsoft and its hardware partners, mobile devices are no longer just nibbling at the edges, with surging sales for tablets sapping demand for lower-end conventional laptops.

Microsoft and Intel, the two poster children of the PC era, have relatively little presence within the emerging mobile landscape, and this needs to change. Windows 8 is that change agent.

Status quo: not an option

Against that stark backdrop, Microsoft had no choice but to swing for the fences. The traditional interface, with its Start button, taskbar, and icons haphazardly strewn about a desktop, may have worked well in a PC-centric world dominated by keyboards and mice, but it wouldn't do in a touch-enabled environment. Microsoft's answer, a colourful interface based on dynamic tiles that give users a peek into what's going on within the apps that they represent, can be an eye-opener at first glance — at least to anyone who hasn't used the similar interface on a Windows Phone device.

This is an industry where even small changes, like Apple's shift from its old 30-pin connector to the Lightning interface, are often greeted with garment-shredding, world-is-ending protests. So a major shift in user interface design could cause a certain degree of consumer pushback. But this is all part of the plan, because the status quo was never an option.

Microsoft needed to break the mold. Its single operating system has to span traditional machines as well as tablets. It has to work just as well with a keyboard and a mouse as it does with a touchscreen. And unlike competing operating systems, it has to bridge the gap between yesterday's PC and tomorrow's tablet.

Picks up where 7 left off

In the immediate term, Windows 8 needs to make up for slowing sales of its predecessor, Windows 7. That older operating system, which had been accountable for as much as 36.3% of Microsoft's revenue soon after its 2009 release, saw its internal share drop to 20.3% of Microsoft's $16 billion in revenue in the most recent quarter as consumers hit the brakes on PC purchases in anticipation of the new platform. While early sales for Windows 8 have been robust — during its most recent quarterly earnings call, Microsoft reported pre-launch sales of $783 million, 40% ahead of Windows 7 sales during its comparable pre-sales period — the revenues were deferred to the current quarter to align with actual delivery dates.

Windows 8 is as close to a bet-the-company move as Microsoft has ever made. The PC era is ending, and Microsoft, which according to Net Applications still enjoys an almost unheard-of 93% share of the combined global market for desktops and laptops, is vulnerable given its relative absence from the platforms that will replace them. Windows 8's multiple-platform capability opens the door to a new generation of hybrid devices that split the difference between the PCs and tablets.

There's a reason Microsoft is putting a rumoured $1.5 billion U.S. behind the Windows 8 marketing campaign. It has a much broader story to tell than simply a new operating system. It's Microsoft's future vision of personal computing, and it starts today.

Carmi Levy is a London, Ont.-based independent technology analyst and journalist. The opinions expressed are his own. carmilevy@yahoo.ca



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