Is Windows 8 already in deep trouble?

The success of Windows 8 is a critical part in Microsoft’s future plans, but are those objectives already too ambitious?

It’s an economic reality that those who rely on limited sources of income are vulnerable. That’s as true a statement for those who made buggy whips when the automobile appeared as it is for Microsoft, the world’s largest software house.

The profitability of this entire company is built on two products, Windows and Office, and the second one is entirely reliant on the first. The continued existence of Microsoft is intrinsically bound to Windows and its ultimate success or failure. With each new release Microsoft essentially bets the farm, with the full knowledge that one day that calculated risk might backfire.

Is this the time that the bet fails catastrophically?

Failure to launch

Not many weeks have passed since Windows 8 launched, and already a number of stories were circulating suggesting that this product isn’t selling in the numbers that Microsoft had initially hoped. Merle McIntosh, senior VP of product management for online for US retailer NewEgg described Windows 8 sales as ‘slow’ in an interview with Readwrite. He wouldn’t mention numbers, presumably to save Microsoft’s embarrassment, but the launch didn’t generate the sales explosion that a new Windows release normally unleashes.

At almost the same time, Paul Thurrott (winsupersite.com) ran a story that indicated much the same, based on information he’d obtained from a Microsoft insider. He presented the internal view of sales for Windows 8 as ‘disappointing’, and even coloured that reaction by saying that it was the opinion of the company that this wasn’t a product issue as such but the fault of the PC makers and their ‘inability to deliver’!

However, it wasn’t just the chattering class that was taking the shine off Windows 8. Even Microsoft CEO Steve Ballmer expressed some reservation when talking about sales. In an interview with the French publication, Le Parisien, he described Surface RT sales as ‘modest’, unless a translation issue modified his words. A number of news sites asked for a progress report on Windows 8 sales, and got the perfunctory “Microsoft doesn’t comment on rumours or speculation” in return.

With this coming the same week that Windows chief Steven Sinofsky left the company abruptly, it seems to suggests that not all is well in the world of Windows.

Destined to fail

The parallels between Windows 8 and Vista are already been drawn, as this was another product that arrived with plenty of pomp but failed to garner the affection that its predecessor XP had achieved. I’ve seen plenty of supposedly smart people argue that Vista didn’t fail, in that Microsoft sold many millions of copies, and then just a few years later convinced many of those customers to spend again on Windows 7.

From an entirely economic viewpoint, I’m sure that Vista showed a return on investment, and it certainly helped Windows 7 get a bigger early foothold in the market. However, the sales are only part of the story, because the real damage that Vista did was to Microsoft’s reputation, something that’s really difficult to represent on a spreadsheet.
In an interview that Steve Ballmer gave to The Telegraph in 2009, he described it in these terms, “We got some uneven reception when [Vista] first launched in large part because we made some design decisions to improve security at the expense of compatibility. I don’t think from a word-of-mouth perspective we ever recovered from that.”

That’s a tacit admission that Vista hurt Microsoft in ways that weren’t easily quantifiable, but have had a lasting impact. The other factor in play as Windows 8 approached was the decidedly good cop/bad cop approach that Microsoft seems to take, where if it makes a poor product, it encourages people to buy the next one, while getting things right has the opposite effect.

This was certainly true of Vista, where the solidity of XP became a barrier to upgrading that Microsoft fought to overcome. Most people are happy with Windows 7, so why should they change it? The game is ‘justification’ and the arguments that Microsoft has been putting forward all seem to assume that you’ll want Windows 8 to go with your Windows phone, Surface tablet and your Xbox 360. By definition that’s a huge assumption, because 97% of the smartphone market are happy not to have a Windows phone, and none of those other items are exactly ubiquitous. Other selling points of Windows 8 seem less than compelling.

Another issue for Windows 8 to overcome was the negative aura that started to circulate about the preview versions in respect of the interface, once called ‘Metro’. From the outset, lots of people didn’t like the most radical change that Microsoft made to the Windows model. It didn’t help that Microsoft didn’t really explain its thinking behind the tiled interface or how the ‘Metro’ side of the coin and the conventional desktop were designed to coexist. In fact, it now seems apparent that they’re not really made to cooperate on any level, and what Microsoft was offering was akin to having two operating systems on one computer. That’s confusing and people don’t see bewilderment as desirable.

This problem was compounded by how Microsoft reacted to the negative comments, given that it released the preview versions ostensibly to get ‘feedback’. That people hated the interface wasn’t the response it anticipated, and at this stage of the product’s development it was committed to delivering the solution in that form. The feedback only informed Microsoft that Windows 8 was going to be a tough sell, and it prepared accordingly for that.

It wasn’t only getting grief from its customers; it was also feeling the heat from its PC hardware partners in regard to the ‘Surface’ announcements. The idea that Microsoft would branch out into PC hardware wasn’t the one they’d anticipated, even if a number did sign up to make their own Surface products to compete. Given that Microsoft provides its operating system to its Surface hardware for free and it charges third-party companies to use it, that was never going to be a level playing field.

There was extra confusion regarding the new Windows RT products, which ran Windows 8 but due to their ARM Cortex-A9 CPU architecture couldn’t run Windows X86 applications. While this might have made perfect sense in the boardroom of Microsoft, it has been just another confusing part of an overly complicated story.
Given all these things, it isn’t really a big surprise that Windows 8 isn’t exactly flying off the shelves, but the reasons for failure might be more subtle than those I’ve just outlined.

Downgradeability

Microsoft is usually very keen to push its latest OS and will often frame its previous releases in negative ways as a means to encourage users to upgrade. However, that’s mostly for retail customers’ consumption; for business users it would rather that they be happier than no longer a customer of Microsoft. Because of this, those that buy Windows 8 Pro will find this curious statement in their ELUA:

“This agreement applies to your use of the earlier versions. If the earlier version includes different components, any terms for those components in the agreement that come with the earlier version apply to your use of such components. Neither the manufacturer or installer, nor Microsoft, is obligated to supply earlier versions to you. You must obtain the earlier version separately. At any time, you may replace an earlier version with Windows 8 Pro.”

Reading between the lines, what this suggests is that you can downgrade the installation to Windows 7 or Vista, and then when you’ve come to love coloured tiles in the fullness of time, you can then go back to Windows 8 Pro. This isn’t in the Home Premium release, just the Pro, so those that buy the former will be accepting Windows 8 from the outset. It’s also not available to those who bought Pro from a system builder (i.e. an OEM licence) or that bought the upgrade version of Windows 8.

This is a mixed message at best. Get the latest OS and downgrade it! However, only some users can do this, depending on which version they bought, and it’s caused a degree of confusion among third-party system builders, who have launched new Windows 8 PCs and now need to support the same hardware for Windows 7 if the user downgrades.

Partner support

In an almost Pavlovian dog response, all PC makers have launched (or relaunched) product lines to make the most of the traditional boost that a new version of Windows gives that industry. This is usually predated on the new version of Windows needing a more powerful PC, but with the exception of touch controls, Windows 8 doesn’t have any greater an appetite for more computing power than Windows 7. That would suggest that the bonus sales of Windows 8 might be exclusively for those who have decided to join the Surface bandwagon or release touch-controlled portable or even desktop products.

In an attempt to assess the waters with regard to the PC industry and Windows 8, I went to a number of big brand online retail stores to see if they’d sell you the same computers with Windows 7 or offer a downgrade path.

Dell

Ahead of the Window 8 launch Dell made it clear that it would continue to offer Windows 7 installations on new Latitude, OptiPlex and Precision PCs, which are its business-orientated solutions. However, a quick check of its current PC ranges for home users reveals that many are only offered with Windows 8 Home Premium, with no means to downgrade to Windows 7.

A very odd twist in the Dell story is Alienware, the special gaming hardware division that will make your PC dreams come true if you cross Dell’s palm with hallmarked platinum. Pick one of its computers, go to the customisation section, select the OS, and you’ll be offered Windows 7 and Windows 8! Whatever the line that the main Dell supply chain is pushing, Alienware is clear that its customers are more discerning and would like to choose what OS is on their hardware, not just the latest. Dell was instrumental in making XP available much longer than Microsoft would have liked, and it might play the same role in keeping Windows 7 around.

Lenovo

This PC company is very business orientated, being the home of the ThinkPad, so it wasn’t a huge surprise that even on its cheapest Thinkpad version it offers to install Windows 7 or 8, depending what the customer chooses. The default option is Windows 8, but it’s nice to see that it’ll put Windows 7 on there for you no problem.

On its website I also found instructions on how to downgrade a Windows 8 Pro installation, as per what Microsoft allows.

HP

Given the dire problems this company is having, you’d really think it might be keen to help its customers in regard to Windows 7 or 8, but you’d be generally wrong. HP announced that it isn’t supporting downgrades, irrespective of what version of Windows 8 you have on. Here is its exact response:

“Customers who are able to and choose to downgrade their HP Windows-8 compatible products to Windows 7 will remain protected by HP product warranties. However, HP has not tested all Windows 8 platforms for Windows 7 and we may not have your particular drivers available. If you choose to install a different operating system (OS) and have a problem that requires HP support, you may need to restore the original OS to fully diagnose your problem.”

Turning that into something more understandable, you can downgrade and your hardware warranty will still be respected, but any software support is your own problem, because HP won’t test its PC with an OS we’ve all been using for the past three years. Nice.

HP later clarified this with a new message on its support site, “Windows 7 will not be supported on these new [Windows 8] platforms, and no drivers, apps, or Windows 7 content will be available through HP.” The bottom line is that if you want a PC, and you’re not sure you want Windows 8, then don’t buy it from HP.

Commitments

From the inconsistent stance of the PC makers, it seems obvious that they’re on board with Windows 8, but not to the point of commercial suicide. Many of those who have many specifically business customers have shied away from a total endorsement, offering instead to keep the Windows 7 wheels turning for the time being.

Having been quite badly burned in the past, especially in respect of the ‘Vista Capable’ sticker fiasco, hardware makers are much less keen on seeing the world exclusively the way that Microsoft does. Almost without exception, if Windows 8 sells PCs then that’s what they’ll be supplied with, but if it fails to light that blue touch paper then they’ll bring you Windows 7 instead, or rely on Microsoft’s own downgrade cop-out for Pro customers.

Those that stick rigidly to a Windows 8 or nothing proposal might find themselves in a difficult place if the OS fails to grab the public imagination. However, the buying public isn’t the really big cash cow for PC makers - that would be the business sector which is feeling the pinch in these difficult economic times.

What’s complicating the Windows 8 story is that almost universally the OS has been ring fenced as unsuitable for business deployment. That’s not to say that you can’t use the Pro version on a business network, but the costs of retraining and integration with existing systems makes it a choice that few businesses would want to embrace.
In addition, the Surface RT product has none of the secure network protocols needed to use it on an administered network and, as such, can’t be introduced into a secure environment.

However, what many business analysts are saying is that touch computing isn’t going to fly in business, because it seems more like playing than work. Having been asked in all seriousness by a director of a company I worked if people really need a mouse to work Windows, I can see the problem with selling touch control into business.

However, the biggest challenge that Windows 8 faces in the business sector is inertia, because once companies have something that works, they’re inclined to stick with it. Statistically, lots of businesses are still using Windows XP and some even Windows 2000. A few have been convinced to move to Windows 7, in numbers that would hardly be classed as a mass exodus. Half of all Enterprise customers have deployed it but not exclusively.

From a business perspective, every minute an employee spends learning how to use it is time that they could be earning money for the business, but they’re not. And, if you’re going to learn something entirely new, then why should it be Windows 8? Why not Apple Mac or Linux?

At the launch of Windows 8, CEO Steve Ballmer was bullish about the Enterprise edition of the new OS, “Business IT departments tell us that Windows 8 will give them what they need and give employees the opportunity to choose the Windows 8 devices they want.”

I think that statement hit the nail on the head, because most enterprise customers aren’t interested in employee choices, and they’re very focused on reducing costs currently.

Waiting for Surface Pro

In the interview that Steve Ballmer gave where he said that Surface RT sales were ‘modest’, he was keen to deflect that issue by saying it should resolve when the Surface Pro appears early next year. With full Intel compatibility and a hefty price, this is where Microsoft gets to realise if its assertions about hardware makers being the source of all its problems are a reality or delusion.

It’s Microsoft’s OS, on its own hardware, marketed by itself, and if it fails, finding someone else to blame could be a real challenge. If the Surface Pro sees more modest sales, the implications for Microsoft, and the visible destruction of its world view, could be very serious from both a commercial view and also for disliked-by-Wall-Street CEO Steve Ballmer.

The importance of this product launch is now paramount, even more than the Windows 8 one, because if this goes wrong, then the last hope that Microsoft hasn’t entirely misjudged the situation will have vaporised.
And, at the point of going to press, Microsoft has no official launch date for Surface Pro or a price.

Has Microsoft failed?

If anything has failed here, it’s probably not Windows 8 but rather Microsoft itself. The problem that it has, and which Windows 8 has failed to address, is that the public associates it with the past glories of computing, while it sees companies like Apple and Google as the visionaries of the future.

That is probably unfair, as Windows 8 is a radical departure in many respects. However, it’s still ‘Windows’, and by definition that’s a legacy tool with a bus-load of baggage that’s far too heavy to be classed as carry-on.
Put yourself in Microsoft’s shoes. Would you like to decide that the Windows era is over yourself or would you prefer that the purchasing public tell you that it’s done?

However, Microsoft doesn’t believe that it’s over, and Windows 8 is its rather odd attempt to sell that concept to an increasingly disbelieving customer base. Until Microsoft embraces the software armageddon that Windows ending must be for it, it’s never going to actually move forward. It’ll just spin increasingly rapidly in the same spot. And that’s what Windows 8 is a perfect representation of.

What else I’m sensing is a reluctance on Microsoft’s part to entirely get behind this product, and it seems to have the odd conviction that it’s somehow being stabbed in the back by the PC makers. I’ve seen it argued that this is why it built Surface itself, as it couldn’t rely on third-party hardware makers to carry this flag.

That’s a leap for me, because when Microsoft brought Vista to market, the hardware makers were a veritable meat-wall for the public backlash, even if Microsoft still felt some heat.

What’s undeniable is that Windows 8 is starting to smell somewhat of Vista. Enough of the Vista era people are still at Microsoft to remember how that went, where the more critical press started poking holes in the balloon before it was released. Microsoft kept the ‘business as usual’ mantra going for an implausibly long time, before finally accepting that it had mucked up badly and rushing Windows 7 to market.

Embarrassing

From a corporate perspective, those things are humiliating, because it’s not like Microsoft is small enough to easily hide, or evade the barbed comments. So the mode that Microsoft seems to be entering now is a slightly more self deprecating one than we’ve been familiar with before, where the language is much less macho and it’s accepting that Windows 8 might not be to everyone’s taste.

That’s the giveaway really, because even when Vista wasn’t setting the world on fire, Microsoft was remarkably bullish about its prospects, and it’s not remotely that positive about Windows 8.

Steve Ballmer clearly isn’t going to wave a white flag from the top of the Microsoft Redmond HQ any time soon, but the firm might be positioning itself to start calling Windows 8 ‘transitional’ or use some other intermediate analogy. I’ve already seen a few leaked pieces of information about Windows 9, and that’s never a good thing in the context of the new version being weeks old.

What Microsoft isn’t saying is how many Windows 8 and Surface machines it’s shipped and what the take-up is, and history suggests we won’t see those numbers for a while yet. This is why I’m inclined to examine body language and the positioning of Microsoft partners to extrapolate how deep the Windows 8 waters run.

No going back

Whatever the truth, Windows 8 is making many in the hardware and software industry very nervous, and the more nervous they get, the greater the likelihood is that it will fuel a self-fulfilling prophesy and contribute to the failure. Microsoft isn’t really helping that situation, possibly because some in the company don’t like where Microsoft has taken Windows.

We are where we are, and it’s too late to retract this move, so Microsoft needs to work hard on making Windows 8 the upgrade to have or move to Windows 9 as rapidly as it can. In shorthand, many people refer to Windows 8 as ‘W8’, which is a texting abbreviation for ‘wait’. I think subliminally most people see Windows 8 and think exactly that.
However, there’s a reality here that Microsoft isn’t really comprehending, which is that even if Windows 8 is a huge success, it won’t return the company to the level of domination that it once had. Microsoft needs to adjust its expectations and then be relieved when its new OS achieves more modest goals.