December 06, 2012, 4:00 PM — Microsoft is betting the farm on the success of Windows 8--its new and radically different operating system.
That at least is the uncompromising view espoused by Steve Ballmer, the company's chief executive. "Our hardware partners are all in, companies like Verizon and AT&T are all in, there are hundreds of operators and retailers around the world who are all in, developers are all in, and--if anyone wasn't convinced yet --Microsoft is all in," he said at the San Francisco launch of the desktop version of the software in October.
But in financial terms, Microsoft may not be quite so "all-in" as Ballmer suggests: The company has plenty more chips on the table to use if its gamble with the new look Windows fails to deliver. Last year the company's revenues from operating system sales accounted for just 25% of its total sales, and almost half of that came from its enterprise licensing agreements which generate cash regardless of whether customers chooses to upgrade to Windows 8 or not. (That's probably just as well for Microsoft--only 4% of enterprises questioned in a recent Forrester survey have specific plans to deploy Windows 8 desktops in the next 12 months.)
So however Windows 8 is received, Microsoft will be just fine financially. But what would the failure of Windows 8 really mean for the future of Windows? Could it spell the end for the Microsoft's client operating system business?
"The current Windows code is now 20-years-old, so for Microsoft doing nothing is just as risky as attempting to introduce the new Windows.
--Michael Cherry, Directions at Microsoft.
"Anything can fail and disappear," says Michael Cherry, an analyst at Directions on Microsoft. "Wang was once the big name in word processing but it has gone, and DEC is no longer around today," he points out. "Windows is used in so many places that it would take more than a single screw-up by Microsoft for Windows to disappear, but I wouldn't say that it could never happen."
This Isn't Like Vista
Failure for Windows 8 would certainly have more far reaching consequences for Microsoft than did the failure of Windows Vista. When that operating system proved not to be the hit that the company had hoped, Microsoft simply moved swiftly on and released Windows 7, a stable and (relatively) secure operating system that is popular with consumers and, increasingly, enterprise customers.