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Why Microsoft Need Not Worry About Windows 8

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Things will get better for Windows 8 eventually, but PC makers will still feel the pain in the meantime, says one analyst.

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It's been a bumpy few months for Windows 8 since its launch last fall.

Global PC sales plunged 14% year-on-year in the first quarter of 2013, and much of the blame was heaped on the lukewarm reception to Windows 8. Microsoft's (NASDAQ:MSFT) new operating system was supposed to provide a boost to the ailing industry but has ostensibly failed to do so.

Microsoft says that it has already shifted 100 million Windows 8 licenses, which matches the sales pace of Windows 7, but six months into the release of the former, NetApplications reports that Windows 8 only has a 3.82% share of the desktop OS market, while Windows 7 and Windows XP still dominate with 44.72% and 38.31% respectively. Back when Windows 7 was also six months old it already had an 11.94% share, NetApplications says.

Analysts at IDC say that the new Windows 8, aimed for use on both traditional PCs and tablets, has alienated customers.
The new Windows 8 interface, with "live" titles for its built-in apps, has received mixed reviews from users.

"Users are finding Windows 8 to offer a compromised experience that doesn't excel either as a new mobile interface or in a classic desktop interface," said Jay Chou, senior research analyst, according to Reuters. "As a result, many users find a decline in the traditional PC experience without gaining much from new features like touch. The result is that many consumers are worried about upgrading to Windows 8, to say nothing of business users who are still just getting into Windows 7."

Microsoft, to its credit, is taking active steps to address the many user complaints about Windows 8. The tech giant will debut the free Windows 8.1 update (code-named "Blue") later this year, which will allow users the option of launching the OS with a button on the bottom left-hand corner of their screens that is similar to the iconic 'Start' menu of previous Windows iterations.

Will the update change the fate of Windows 8? Richard Windsor, founder of the mobile-focused blog Radio Free Mobile and a former tech analyst at Nomura, says that it is almost irrelevant, because now that Apple (NASDAQ:AAPL) has stopped gaining market share in the PC world, PC users will eventually have to upgrade to Windows 8, given the Microsoft hegemony of the market. So the Redmond, Washington-based company will not be too worried about the fate of Windows 8 at this point.

The lackluster reception to Windows 8 is probably of much greater concern to PC makers like Dell (NASDAQ:DELL), Acer (TPE:2353), and HP (NYSE:HPQ), who "are not sitting on a huge cash pile and 90% market share," he tells Minyanville.

Windsor argues that original equipment manufacturers need to better articulate to customers why they should upgrade to Windows 8, because "everyone know that Windows 8 exists but no one has a clue why they should buy it."

The proposition is that of a Microsoft ecosystem, "a unified experience across all devices that is integrated and easy to use. But useful and delightful is not what users see. Potential buyers are presented with what I refer to as Blue Squares of Death," he says, noting that the problem went away with Windows 7 but unfortunately resurfaced with Windows 8.

"When a user picks up a Windows Phone or a Windows 8 device at retail he or she is presented with a screen full of blue or red squares labeled People, Maps, Music, Games and so on. Hit any one of these squares and nothing is found. In most cases, the device is not even connected. This is the equivalent of going into a supercar showroom with $100,000 in your back pocket and not being able to have a test drive," opined Windsor.

"Furthermore, Microsoft offers a consistent experience from console / TV through PC, tablet and phablet all the way to the phone. These devices are never displayed together and therefore potential buyers never realize that this is an ecosystem for every device. How on earth Microsoft expects user to buy Windows Phones and Windows 8, when it does not show them what it is capable of and how wide its scope is, is a mystery."

Jeff Haynes, editor at Tech Bargains, agrees with Windsor that users will come around to Windows 8 sooner or later.

"Sure, there will be diehard holdouts that will keep Windows 7 alive, but for the most part, user options will boil down to adopting the system they hate, wait for its replacement, or move to Mac or Linux," said Haynes.

"As for [Original Equipment Manufacturers], the best thing they can do is come up with machines that are innovative, affordable, and that provide new compelling experiences within the Windows 8 ecosystem. You can see this with the rise of convertibles, ultrabooks, and the upcoming launch of processors like Intel's (NASDAQ:INTC) Haswell, which purports to substantially expand the battery life of computers," Haynes added. "If they don't, the OEMs will find more and more people actively seeking to abandon Windows 8 and starting the move towards tablet computing instead of laptops and desktops.

Also see:

Xbox One, PlayStation 4 -- and Apple? -- in the Age of Convergence

Why I've Given Up Hope for Apple, Google, Microsoft to Deliver Better TV

'Pitches Are Like Blind Dates': The 11 Things Top Investors Want Startup CEOs to Know


Twitter: @sterlingwong

No positions in stocks mentioned.
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