Windows 8, Surface tablets to lead Microsoft's fight for relevance in 2013

By Shane O'Neill , CIO |  Operating Systems, Microsoft, Microsoft Surface

"Microsoft has two stacks of products--one stack is strong and the other is questionable," says Wes Miller, research vice president at independent analyst firm Directions on Microsoft. "Products like Xbox Live, Server and Tools, Windows Azure, Windows Server 2012 and Office 365 for businesses will make enough money this year to prop up struggling parts of the company. But Windows 8, mobile and consumer adoption remain question marks."

Veteran tech analyst Roger Kay contends that Microsoft's cash cows are, in fact, dwindling, leaving Microsoft more vulnerable than ever in 2013. Financial results for Microsoft's last quarter confirm that revenues for the Windows and Office divisions are both down year-over-year, Windows much more so than Office.

"Microsoft's main weakness is that Windows and Office are no longer growing," says Kay, adding that he is doubtful that Microsoft can still invest in newer markets while shrinking cash cows maintain the company.

The biggest shock to Microsoft's system, he says, is diminishing Windows revenue over the past year, which will be particularly troublesome if Windows 8 fails to catch on in 2013.

"Windows 8 showcases touch, which is useful, but not in non-modern form factors like desktops, which are still widely used in the enterprise," says Kay.

This underscores the risks of putting the touch-centric Windows 8 user interface (formerly known as Metro) front and center on laptops and desktops, machines that have not made much use of touch-screens in the past.

"I'm just not sure the demand is there for touchscreens on laptops and desktops," says Miller. "But, to be fair, Windows 8 is only two months old so we should give it some more time to find its audience."

However, one thing is clear: Enterprises do not have much motivation to adopt Windows 8 wholesale for all employees like they did with Windows 7. Kay predicts that businesses will use Windows 8 and Windows RT tablets as sidekicks to existing PCs, but that's "not likely to provide the revenue that Microsoft needs and has come to expect from Windows, and Microsoft is a company designed for high volume and high revenue."

Did Microsoft Betray Partners With Surface Release?

Last summer, Microsoft surprised its hardware partners (to put it mildly) by announcing Surface, a Microsoft-branded tablet with versions running Intel-based Windows 8 Pro and ARM-based Windows RT. The Surface marks a bold break with tradition as Microsoft finally adopted Apple's integrated hardware-software model for its own devices.


Originally published on CIO |  Click here to read the original story.
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