Is Microsoft losing touch?

On October 26, 2012, Microsoft launched Windows 8, the biggest overhaul ever of the Windows family of operating systems, in terms of look and feel at least. More than half a year later, if one judged only by the number of licences sold (100 million as of May 2013), one might say that Microsoft’s foray into the touch-screen interface business was a huge success.

But while it has made inroads in the consumer market, this is certainly not true of the enterprise, where most IT directors remain sceptical. In fact, it’s hard to find any who have more than a wait-and-see attitude towards adopting the new operating system.

So how could Microsoft generate a 100 million sales figure without penetrating the enterprise market in a substantial way?

Sales of Microsoft’s own tablet and hybrid computers, the Surface RT and Surface Pro, aren’t contributing to the large number. According to analyst IDC, only 900,000 units have sold in the first quarter of 2013, and that figure includes both Surface RT and Surface Pro.

Other companies’ tablet hardware carrying Windows 8 isn’t doing much better: IDC says that Windows 8 sales on all tablets combined (Microsoft hardware and hardware from all other vendors) reached only 1.8 million units in Q1 of this year, placing the latest version of Windows a distant third behind Android and iOS, with 27.8 million and 19.5 million sales, respectively.

The biggest contribution to the large Windows 8 sales figure actually comes from purchases of new desktops and laptops. But while 100 million is a large number, it only represents 5.1% of the overall personal computer market. Furthermore, tablets should overtake both desktop and laptop sales by 2015; and within the tablet market, buyers – consumer and corporate – will give increasing preference to the smaller screens. Is Microsoft ready for that?

“Recent rumours have circulated about the possibility of smaller screen Windows RT and Windows 8 tablets hitting the market,” said Ryan Reith, program manager for IDC’s Mobility Tracker programme.

“However, the notion that this will be the saving grace is flawed. Clearly the market is moving towards smart 7-8 inch devices, but Microsoft’s larger challenges centre around consumer messaging and lower cost competition. If these challenges are addressed, along with the desired screen size variations, then we could see Microsoft make even further headway in 2013 and beyond.”

Stephan Conaway, CIO at the London Borough of Brent, is keeping a close eye on Microsoft’s position. “They are losing relevance,” he says. “Four years ago Microsoft had dominant mindshare with the majority of CIOs. Now it is much less so. One can discuss technology for hours and Microsoft is rarely mentioned.

“Windows 8 is surely one of the steps to try to regain the dominant position that they have enjoyed for the past 20 years. As long as they remain desktop-focused, that might not happen.”

One solution for all

Microsoft has known the market is moving towards tablets for quite some time, and building Windows 8 around the touch model is its response to this paradigm shift. At the same time, the company couldn’t just abandon its huge install base in the enterprise market. As much as possible, it wants to avoid marketing divergent operating systems, so it lumped it all together into Windows 8.

Windows 8 brings about a radical change with the new ‘Modern UI’, which is designed primarily for touchscreens but which can also be used with a mouse and keyboard. Programs must be written specifically for the new interface, and that is one of the reasons for the break in compatibility between Windows 8 and the long-established Windows 95 family, which includes Windows XP, Windows Vista and Windows 7.

Another concern is that while it is possible to use Windows 8 with a standard mouse and keyboard, it’s still awkward. Essentially, Windows 8 is optimised for a touch-screen interface.

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