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Windows Blue won't solve all Microsoft's problems, analysts say

Drumbeat of leaks leads to high expectations for upgrade, but pricing, form factor and apps need attention, too

Microsoft's failure thus far to significantly spark PC and tablet sales with Windows 8 has put high expectations on an expected 2013 refresh of the OS, dubbed "Blue." See also: What is Windows Blue? Everything you need to know.

But changes to the operating system's feature set, tweaks to its user interface (UI) and modifications to some of its subcomponents are actually solutions to minor problems, analysts said. They point to more important issues like pricing and positioning, app shortages and enterprise reluctance as beyond the scope of an upgrade.

Microsoft has said little of Blue, the code name for the first Windows 8 upgrade, reportedly to ship this summer or fall, as well as the moniker for the company's faster-paced development and release schedule. It's only acknowledged the code name and touted what it's called a new "continuous" update strategy for Windows on desktops, tablets, servers and smartphones.

For example, last week Microsoft's CFO Peter Klein used the "Windows Blue" label, and added, "With Windows 8, we are setting a new, accelerated pace for updates and innovations."

Several long-time Windows watchers, including Mary Jo Foley of ZDNet, Paul Thurrott of Supersite for Windows and Tom Warren of The Verge, have been tracking leaked builds of Windows Blue -- which may be named Windows 8.1 -- and describing its changes in detail.

The constant barrage of news, minor in each instance but cumulative over time, has many setting high expectations for Blue. "There are high expectations for Blue," agreed J.P. Gownder, an analyst with Forrester Research. "It's positioned as a much bigger release than a service pack, because it will augment the core products."

Microsoft's service packs, the historical form of its interim updates between new Windows editions, have included few feature changes, instead limiting themselves to collecting bug and security fixes released previously.

Windows 8 is not in danger of dying, analysts stressed, but many of them called the focus on UI changes and small-to-medium enhancements and additions misplaced. Microsoft has bigger fish to fry.

"I look at Windows 8, no matter how many iterations it goes through, as a transitional product," said Michael Silver of Gartner. "Windows 8 is very transitional. It has lots of rough edges where the desktop and touch interfaces didn't integrate. But the hardware is transitional, too. Really, 2013 is sort of a lost year for Microsoft and Windows."

Future processors from Intel, including the Clover Trail and Bay Trail upgrades to its Atom architecture, will be necessary, said Silver, to put enough power and long-enough battery life into Windows tablets.

Others cited different problems Microsoft faces.

"First of all, price is a major issue," said Peter King, an analyst who focuses on tablets for U.K.-based Strategic Analytics, in a Thursday interview. "Clearly the market wants cheaper tablets. Everyone's ASPs [average selling prices] are declining, Android's most of all. Windows tablets' [ASPs] are too high."

Microsoft does plan on addressing price this year. "We are working closely with OEMs on a new suite of small touch devices powered by Windows," Klein said during an earnings call with Wall Street a week ago. "These devices will have competitive price points, partly enabled by our latest OEM offerings designed specifically for these smaller devices, and will be available in the coming months."

Analysts heard the line "latest OEM offerings designed specifically for these smaller devices," as confirmation that Microsoft will lower the price of Windows to computer and tablet makers, or provide rebates on their license purchases.

"When Microsoft conceived this [Windows 8 and Windows RT] project in 2010, tablet prices were high," said King. "But the world's changed very quickly. The trend is towards smaller, cheaper tablets."

Fewer than half of the tablets expected to ship in 2013 will sport screens larger than 8 inches, King said, echoing other forecasts by the likes of IDC.

Microsoft, in other words, aimed at quickly-disappearing target with its demand for 10-in. screens for Windows 8 and Windows RT devices, and now must scramble to shift gears.

Michael Cherry, an analyst with Directions on Microsoft, saw an alternative reason why Windows Blue, although perhaps welcome, isn't enough to markedly move the meter for Microsoft.

"Windows 8 sucks because Windows 8 apps suck," said Cherry, not mincing words. "And there's nothing in all these rumors of Windows Blue or Windows 8.1 that tells me that apps will be easier to write or that will result in better apps."

Microsoft's apps tally -- those touch-centric programs that run in Windows RT and in Windows 8's "Modern"-style UI -- are far behind that of those for Android and iOS tablets. More important, experts have said since the October 2012 launch of Windows 8, is the lack of high-quality, must-have apps necessary to make Microsoft-powered tablets or convertible device competitive with devices relying on rival operating systems.

Cherry strongly argued that until Microsoft can solve the apps problem, nothing else it does will really matter.

"Everyone's obsessed with the look of the thing. What do I care about a Start button in Windows 8 if I spend all my time on the desktop? It's the lack of good applications [that's hurting Windows]. And from what I can tell, developers aren't going to get anything from Blue. I don't see anything about apps getting better."

To prove his point, Cherry pointed to the apps Microsoft has created for Windows 8 and Windows RT, such as the "Mail, Calendar, People and Messaging" app.

"If that's the best Microsoft can do, if that's what they come up with, with their resources, it's no surprise that there's not a [third-party] app worth a darn," said Cherry.

Rather than tout its new, faster release cadence, Microsoft should instead tell developers what it will do to help them make top-notch apps. Without those, Cherry questioned the entire Windows strategy. "Make a statement of intentions on development," he urged Microsoft. "Tell developers, 'We're going to get you all the assistance and all the documentation you need, we will create apps that are so full-featured that they will inspire you to write great apps.'"

Microsoft may be able to solve the pricing, form factor and app problems these analysts see as critical to Windows' transition from a desktop OS to one that works equally well on touch-enabled tablets. None are counting the company out.

"Never assume that the first iteration will succeed," said King of Strategic Analytics. "For a small company, a failure could be disastrous, but for Microsoft, as large as it is, it's just a hiccup."

"I don't think this is Microsoft's last shot [at Windows 8 success]," said Forrester's Gownder of Blue. "Microsoft has made missteps with Windows 8, but they did the same with Windows Vista. And they moved on. They have an established position in the market, and a lot to offer. They'll get there."

Gartner's Silver may not have been that optimistic -- "Blue isn't going to save Windows or PCs," he said in an interview earlier this week -- but like Gownder, he conceded that Microsoft has more than one chance of making Windows 8 palatable to consumers and enterprises.

"They'd better have multiple iterations of Windows 8, because its attempt so far to blunt the affect of tablets on PC sales was pretty minimal," Silver said. "Microsoft is right in looking toward the next release, admitting it make mistakes. At least it's a step in the right direction."

This article, Windows Blue won't solve all Microsoft's problems, analysts say, was originally published at Computerworld.com.

Gregg Keizer covers Microsoft, security issues, Apple, Web browsers and general technology breaking news for Computerworld. Follow Gregg on Twitter at @gkeizer, on Google+ or subscribe to Gregg's RSS feed. His email address is [email protected].

See more by Gregg Keizer on Computerworld.com.

Read more about windows in Computerworld's Windows Topic Center.


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