PC Innovation Won't Pay Off

Brandy is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

Microsoft (NASDAQ: MSFT) is poised to launch its new OS across PCs, tablets and smartphones. The company is hoping that the new products will establish the Microsoft name in the mobile realm, putting it into closer competition with Apple.

Despite the hoopla, I believe that Windows 8 won’t achieve continued success, like Windows XP or 7, and is bound for the dark, dusty closet where Vista resides. As happened with Vista, Windows 8 will reach a degree of initial success simply due to the fact that it will come preinstalled on a number of new devices. But customer dissatisfaction could drive a new OS faster down the pipeline and push Microsoft back to more familiar territories.

 In this three part series, I’ll discuss why the PC, tablet, and mobile phone projects are likely to fail. We’ll start where Microsoft’s bread has been historically buttered:  personal computers.

Microsoft’s “New Coke”

The purpose of the new Microsoft products is to create a streamlined experience between mobile devices and desktops. That created a PC OS that looks quite different from previous Windows releases. Gone are the familiar Start buttons and desktop, ushered out in favor of apps-like tiles and an interface closer to what’s found on tablets.  

Evolution is necessary for technology companies but Windows 8 is poised to become Microsoft’s “New Coke”. Bumps are already appearing in the road…

  • Early Dissatisfaction

There were around 1 million downloads of the beta version released earlier this year, suggesting at least a general curiosity. But there’s anecdotal evidence that there are problems in the world of 8. The Windows 8 help and support forum Forumswindows8.com recently did an informal survey among 50,000 early users of the OS. When voting on a favorite OS, 53% chose Windows 7 while only 25% opted for Windows 8. That could just be a case of favoring the familiar over the unfamiliar, right?

Sure, but there are others discussing potential problems…

  • Nervous Whispers

Bloomberg reported claims that Intel's CEO Paul Otellini told employees that he felt Windows 8 was being released before it was ready. Intel issued a rare statement that was also a bit of a non-denial. There are further rumblings that all might not be well in the land of Windows 8.

All Thing D’s Arik Hesseldahl checked in with a couple of industry insiders to gauge the current rumors about the forthcoming OS. Patrick Moorhead (Moor Insights and Strategy) had heard that “Problems range from the small, which can be fixed quickly with a patch, to major ones like Vista.”

Jim McGregor (TIRIAS Research) had the money quote: “They can’t afford another launch like Windows Vista, which had so many problems, especially if they want enterprise adoption.”

Comparisons to the “V” word should bring goose bumps to any MSFT investor. Vista was a colossal failure with far-ranging issues that were never ironed out. While Windows 7 recently passed the decade-old Windows XP as the most popular operating system, with both sitting just above a 42% market share, Vista is holding steady at….6%.

  • Barren App Store

PC World has a great piece detailing how empty the Windows Store is less than a month before Windows is launched. The Windows Store supplies applications not only for Windows RT mobile devices but also desktop apps for the PC version. The number of apps in the store exceeded 2,000 a mere week ago, compared to the approximately 700,000 apps available in the stores for Apple and Google Android products. No one expects MSFT to match Apple’s app numbers at launch time. But there are some notable names still missing from the Store, including Facebook and Netflix.

The PC World piece points out the Catch 22 of developers not wanting to create for a platform until it’s well populated. If a lack of apps continues, it will be more of a problem for the tablets (which rely entirely on the apps) and less so for desktops, where browser usage is more practical. But the app tiled desktop will make it glaringly obvious if a user isn’t finding enough quality content in the Store.

  • AMD to the Rescue?

Chipmaker AMD (NYSE: AMD) is teaming up with a software startup to bring half a million Android apps to Windows 8 tablets and desktops via the AppZone player. The setup is more appealing for developers and fixes potential compatibility issues. The companies are hoping to eventually have the AppZone player preinstalled in AMD devices manufactured by the likes of HP. AMD also hopes the project will sway users away from using Intel powered devices.   

Final Thoughts

The PC market isn’t dying so much as it is shifting. Apple is the only first-tier PC brand expected to have shipment growth going into the end of this year, with up to a 30% growth year-over-year. It isn’t an outright case of consumers completely shunning PCs in favor of tablet usage. But the uptick in tablet, and smartphone, ownership has made it easier to hold on to an older model of computer for longer since the innovation is in your hand.

Consumers and businesses who want to stick with a simpler, more traditional version of Windows could hold on to old systems for even longer. Windows 7 is still fairly fresh and it would be possible to hold onto it until Microsoft has shown whether it will move back towards basics.

If it doesn’t, I hear MacBooks are nice this time of the year.

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