How big is Microsoft gambling with Windows 8?

Analysts try to parse the risk Microsoft's taking by blending touch with the desktop in one OS

Analysts parsing what Microsoft revealed of Windows 8 earlier this week are split today on how big the company's gambling with its operating system cash cow, some saying the bet was for the farm, while others said it was the best move Microsoft could make.

"They're betting the farm on this one," said Wes Miller, an analyst with Directions on Microsoft who worked in the Windows team from 2000 to 2004. "This is a bigger jump for Microsoft than .Net," he added, talking about the software framework Microsoft debuted in early 2002.

Earlier this week, Microsoft showed off parts of Windows 8 -- company executives stressed that the name was not official, but what it was being called for now -- at the All Things Digital technology conference, and at a computer trade show in Taiwan.

Windows 8 will feature a "touch-first" interface to help it compete in the fast-growing tablet market, but underneath that will offer a more traditional Windows-style desktop. In demonstrations, Microsoft showed the touch-style start screen for Windows 8, and how users could switch to a more familiar icon-based interface.

Calling Windows 8 a "reimagining" of the decades-old OS, Microsoft said the all-in-one OS will respond to both touch and keyboard-and-mouse navigation, and run on a wide range of devices and form factors, from small tablets to large desktop systems and screens.

That strategy got both kudos and criticism from Microsoft experts -- sometimes both from the same analyst -- with the critics wondering how the company's biggest customers will react to an upgrade that so aggressively pushes touch.

"Microsoft's problem is how do they keep the existing customer base with Windows while addressing touch," said Miller, all without alienating the enterprise customers that drive Windows revenues. "Some will look at this and think of the old Saturday Night Live skit.... 'It's a floor wax and a dessert topping,'" Miller added.

"The gamble is that by dragging legacy Windows to the tablet, Microsoft runs the risk of damaging its traditional desktop Windows business," said Al Gillen, an analyst with IDC. "Windows 8 is all about the tablet. I think it's dead on arrival for business customers."

Others said much the same, calling Windows 8 a "consumer" release that offers little or nothing for business.

"Yeah, there's a gamble here," said Michael Silver of Gartner. "This will be more likely to be taken up by consumers than businesses."

"Honestly, Windows 8 is all consumer," agreed Miller. "It's all about 'How do we deal with this iPad problem?'"

Not that that's necessarily a bad thing. "Organizations will have a hard time with Windows 8, but then they're tired from their Windows 7 deployments," Silver said.

Silver argued that enterprises will skip Windows 8, just as most did with Windows Vista, and instead stick to Windows 7, a tactic that Microsoft itself endorsed when it recommended that businesses now deploying Windows 7 stick with their plans.

But even Silver acknowledged that Windows 8 is a smart move by Microsoft.

"Microsoft needs a more modular approach to Windows, one that lets it put different components on different devices," he said, echoing recommendations he made in 2008 when he warned Windows was "collapsing" under its own weight. At the time, Silver said that unless Microsoft made radical changes, including putting Windows on a diet and making it modular, the OS risked becoming unsustainable.

"Microsoft needs a next-generation, lighter-weight OS, and that's what we're seeing signs of here with the new HTML5 and JavaScript [application] model," said Silver. "I see this as essentially the slimming down of Windows."

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