An array of industry experts analyze Windows 8's chances in the marketplace.
With Windows 8, which straddles desktops, mobile devices and gaming consoles, Microsoft hopes to deliver a compelling new user experience via a single operating platform that spans multiple hardware architecture (x86/ARM).
But will the new OS live up to its potential? Will Windows 8, which Microsoft claims is about re-imagining the OS, fulfill this big promise?
Most industry observers appear to be bullish about Windows 8 release. In a January 2012 analyst report on Microsoft’s earnings, Credit Suisse says that Windows 8 holds promise despite the potential impact of lackluster PC demands and the continued disruptions caused by HDD (hard disk drive) on Windows’ revenues.
Mathew Casey, software research analyst at Technology Business Research (TBR), echoes the optimism about Windows 8. “Windows, we believe, can play a much bigger role in the mobile space, which Apple and Google currently dominate. The benchmarks are high. Microsoft thus far has been at a disadvantage and Windows 8 could be their best opportunity to take some of the market share in the tablet space,” he says.
Even consumers appear to hold an encouraging view at the moment -- though perhaps fueled by Windows 8 rumors. Recent research by iYogi Insights finds that 69% of PC users endorse Microsoft’s strategy for a seamless interface across multiple devices. 85% of existing tablets users would like their PCs and tablet interface to have the same look and feel. 19% of the respondent who do not own tablets stated that they would upgrade to Windows 8 and 57% of tablet users like the idea of the Windows 8 touch screen interface and would love to upgrade given the opportunity.
The Apple Question
But, a huge question remains – Will Windows 8 user interface provide users with experience superior than that of Apple? The industry-shaking success of Apple’s iPad and iPhone has been built almost singularly on user experience.
“Microsoft in the past has been seen as clunky and hard to use. This is what needs to change with Windows 8. It remains to be seen if they can take on an Apple and a Google, but that is what they need to go after. If they do not, then their market will be significantly limited,” says Jack Gold, principal analyst at tech research firm J Gold Associates.
The new ecosystem, industry observers believe, complements the existing one. Microsoft has worked very hard to protect its ecosystem, unlike Apple, which shares a different philosophy.
“Apple was not afraid to build a new ecosystem and start with zero installed base of applications,” remarks Al Gillen, IDC analyst. When Apple built the iPhone, for instance, it did not bring on board any application from the MAC OS X10.5 world.
Consequently, Apple today has two ecosystems – the iOS and OS X10.5, exclusive environments that call for developers to develop two versions of the same application. “In Microsoft’s case, standardizing on a single OS across multiple hardware architecture is a key strategy. What will be vital to the company is to not sacrifice their existing core user base but add more functionality and capabilities with new mobile applications and support,” says Gillen. This is where Microsoft’s dual strategy comes under the scanner.
Industry observers appear divided on how Microsoft’s support for ARM will pan out in the Windows 8 release. On the one hand, Allan Krans, an analyst at TBR, feels Microsoft’s support for ARM is an erosion of one of its core partnerships with Intel. “It symbolizes the severity of how Microsoft views the shift in mobile playing out. For the first time, it has been forced to look outside of Intel to ensure its relevance in the market,” he says.
On the other hand, IDC’s Gillen believes this is a smart move. Clearly, Microsoft cannot afford to walk away from its huge x86 customer base. The x86-based tablets give customers a better transition path from the existing PC environment to the tablet-based form factor.
With ARM, the company has to start from ground zero primarily because of its different architecture – but there is a strategy in place. While the existing applications will be unable to take advantage of the Metro user interface, it will be compatible with Windows 8 on the x86 architecture.
So, those who do deploy the Windows 8 OS on their PCs will be able to utilize the same applications they have used before. However, the new applications will only be available on the Metro UI, which calls for some backward compatibility – a decision ISVs will have to make.
Developers and Apps
A robust ecosystem of developers has historically been Microsoft’s strength -- a factor that should help the company compete with Apple. Though Microsoft is keeping its cards close to its chest, Ovum believes that the ‘Windows Store’ will play a key role when Windows 8 finally launches. Richard Edwards, an analyst at Ovum, feels that in an increasingly app-centric, consumer-oriented world, the revenues that Microsoft drives through a Windows app store will undoubtedly be an important measure of the commercial success of Windows 8.
The initial move to Windows 8 will, however, be determined by the extent to which Microsoft’s vast ecosystem of partners and developers support the new operating system. If hardware devices and applications are scarce or incompatibilities arise, then Windows 8 could be another ‘Vista.’ With Android and Apple also vying for market attention, industry observers cite a bit of hesitancy from the developer community on building native Windows 8 applications.
“This is a bit of a chicken-and-egg situation for the company. Microsoft needs a user base to be attractive to a developer community and a developer community to be attractive to the user community. They will need to find developers more optimistic about their prospects for making money for Windows on ARM and eventually build the user base,” says TBR’s Krans. Progress will be incremental and there will be no tipping point that will automatically win the customer base and its developers along with it, he added.
Aside from some advanced Windows 8 users – the tech elites – the OEM’s may not be all that excited about ARM, adds J Gold Associates’ Gold. He rationalizes that ARM’s growing market share in the smartphone and tablet spaces make it an ideal candidate for Microsoft to partner with. But he does question if the performance of Windows on ARM will be on par with that of Intel. As a result, he feels Intel and the Atom chips will continue to be important going forward.
“From an OEM perspective, they are looking at the price. If they believe they can get an ARM at price lower than Intel, they will be able to build a system that is less expensive and accordingly more attractive to customers. While this is what OEMs are really driving, you will still need to take into account the performance – which is why it is unclear what will pan out,” he says.
The enterprise approach to Windows 8 will also be split, anticipates Gillen. ISVs who develop applications not optimized for touch interface or those who develop business-oriented applications could move slowly towards Windows 8 and the Metro UI, as there might not be any market pull for their products in the near term.
This also relates to the shift in the industry. Organizations today are eliminating their Windows XP machines and deploying Windows 7. IDC believes this will continue, and for the most part, the majority of the organizations will probably skip Windows 8. “And frankly that makes sense and Microsoft understands that. In fact the advice Microsoft is actually giving their enterprise customers is to not focus on Windows 8 and continue with the deployment of Windows 7,” Gillen says.
Microsoft has kept the industry guessing as to exactly how the new OS pan out. Nevertheless, Windows 8 is Microsoft’s most important release in a decade and it is starting to generate interest in the industry. Designed to be fun and easy to use across a range of new and existing device types, Windows 8 straddles the old world of PCs/laptops with the new mobile world. Supported at launch by the Windows Store and well-established channel and ecosystem, Microsoft has a real opportunity to catch-up and overtake Android in the tablet space and to defend its position on the desktop against Apple.
If Windows 8 does succeed in holding off the threat from Apple, research firm Forrester believes it could mean a total realignment of alliances and competition. In its report ‘Microsoft Transforms Windows for the Post-PC era’, Forrester opines that a Microsoft win could kill Android on tablets.
Furthermore, a successful execution of Windows 8 implies OEMs could ditch their failed Android tablets in favor of Windows. The report adds that while Android tablets appealed to vendors like Dell and Toshiba, a great Windows 8 experience (provided that it’s available in 2012), could lure these vendors back to Microsoft.
Forrester also envisage a new competition for PC manufacturers. With netbooks and tablets, nontraditional competitors from the PC and mobile markets went head-to-head in the manner of Acer versus Motorola, Dell versus RIM, etc. Forrester believes that a Windows OS that runs natively on ARM has the potential to further open up the already competitive landscape.
The research firm believes that within a year of the Windows 8 launch, the competition for Windows devices will be significantly altered from what it is today. And lastly, given Microsoft’s choice of Computex as a venue to demo Windows 8, the Original Design Manufacturers (ODMs) could have an opportunity to move up in the Windows value chain and compete head to head with brand-name OEM’s.