Windows 8.1

Part 1: Some Thoughts On The Future Of Windows
Part 2: Some Thoughts On The Future Of Microsoft

This is the first of two articles about what lies ahead for Microsoft and Windows. No one can predict the future in this dizzying hyper-competitive environment – there are too many variables to know whether Microsoft will be dominant or irrelevant in a few years. These articles draw together some of the developments that are going to help decide that fate. There’s no conclusion and no takeaway, just some background to help you interpret the news in the next year.

Microsoft’s overall position is pretty clear. It dominates the market for desktop operating systems, of course, but it was outmatched in the transition to mobile and cloud computing and gave up the phone and tablet markets to Google and Apple. It’s so far behind in mobile devices that it may not ever become a major force in those markets. Its strategy is to create a version of Windows that is touchscreen-enabled and consistent on devices of all sizes, then immerse Windows users in an environment where all resources – files and services – are readily available everywhere on every device. Microsoft’s problem is that Google and Apple are busily creating compelling ecosystems of their own and have demonstrated far more creativity than Microsoft so far.


In October, Microsoft will release Windows 8.1, an update to Windows 8 that will be shipped on all new Windows devices this fall – computers, laptops, and tablets. It will be a free upgrade for current Windows 8 users.

On the one hand, Windows 8.1 is only an upgrade that does not drastically change course. It still has many elements that are best experienced on mobile devices with touchscreens – the Start screen to open programs, full-screen apps replacing traditional desktop programs. Microsoft is not retreating from its vision of Windows as a unified platform for devices of all sizes; that’s only possible if Windows moves beyond the familiar desktop, which does not scale down to small devices.

On the other hand, Windows 8.1 has so many small changes and improvements that it almost qualifies as a new Windows version. Windows 7 was a collection of small improvements over Vista, but that was enough to give the entire Windows environment a new lease on life. Windows 8.1 is friendlier for new users than Windows 8 and more satisfying to use for everyone.

At the same time the manufacturers are finally in gear, producing sleek new laptops based on Intel’s Haswell processors as well as tempting new Windows tablets which will be released this fall.

Businesses and some consumers will still resist Windows 8 but there is a fighting chance that it will avoid the fate of Vista, the death of a thousand cuts caused by the widespread perception that it is to be avoided. Windows 8.1 might even start to be accepted in business as large enterprise IT departments begin to realize the security and manageability advantages of Windows mobile devices compared to iPads and Android tablets.


Many businesses – especially large enterprises – have been procrastinating about the problem of their aging old workstations. Microsoft is going to stop supporting Windows XP in April 2014. That means no new security updates, and that will represent a risk that simply cannot be allowed on anyone’s desk. At the same time, there are more devices and programs appearing every day that do not support Windows XP, and the computers are getting absurdly old and slow.

The problem is that hundreds of millions of computers worldwide run Windows XP – over 300 million in corporations alone. Microsoft and the PC industry stand to gain from the inevitable upgrade cycle to clear out the Windows XP legacy machines, a cycle that is already under way and gaining momentum, but it will likely not be enough to staunch the bleeding in the PC industry.


There is no ambiguity about the long-term trend: sales of desktop computers are declining, sales of tablets and phones are skyrocketing. The trend will continue. If Microsoft had not retooled Windows to address that reality, it would be much further along on the road to irrelevance, providing products for enterprises but cut off from the world of new devices where the growth will occur. It is already uncomfortably close to that place now and needs very skillful execution to stay relevant (and many of its moves have not been very skillful in the last year).

Paul Thurrott wrote an article last week about strategies that might help Microsoft succeed. It’s an interesting read about whether it makes sense to emulate Apple (tight vertical control of devices and operating system) or Google (give away the OS for mobile devices and profit from apps and services). There was one paragraph in it that struck me like a blow, a simple insight that tells so much about how our world has changed.

“With Android and perhaps with Chrome OS, Google is attempting—and perhaps succeeding—at rendering Windows irrelevant. Which it sort of already is. Metro has gotten off to a slow start, obviously, and there hasn’t been a major new Windows desktop application in years. You couldn’t name one if you tried. And the top two desktop applications, Chrome and iTunes, are designed to push users away from Microsoft’s platforms and onto Google and Apple platforms. These developments put arguments about saving the desktop in perspective, eh?” (Emphasis added.)

He’s right. There is no shortage of innovative technology, genuinely new things that will transform our world, but none of it – none of it! – is happening on our desktop computers running Windows. The innovations are on our mobile devices and on online servers aggregating our data to provide more personalized services. We haven’t asked our desktop computers to do anything new in many years.


It’s worth noting, though, that a lot of those web servers powering the brave new world are likely to be running Microsoft server products. The server divisions of Microsoft and the teams developing behind-the-scenes enterprise products are quietly doing amazing work, refining products that were already rock solid. Windows Server 2012 R2 will be released next month with Windows 8.1, and it’s awesome.

Meanwhile, Microsoft’s Azure service is a massive effort to shift server-based office computing to the cloud, providing a cloud-based platform for virtualized servers, SQL databases and more, with more features and easier controls than competitors like Amazon.

Within a year or two, I expect to have viable options for small businesses that move the company servers completely offsite, with literally nothing in the server closet except an Internet connection. It’s going to make for more hard going for hardware vendors like Dell and HP, but Microsoft is poised to profit from it.

Microsoft’s server division is pumping out profits that stand alongside the traditional cash cows, Windows and Office. In some ways the future looks brighter for the server division, which does not have the same kind of fast-moving competition and which looks as if it will successfully make the transition to the era of cloud computing.

Next: a look at some of the huge corporate changes at Microsoft and some thoughts about the phone business.

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