Microsoft Gambles With Windows 8

Analysts say the consumer focus of the next version of the operating system could turn off enterprise users.

Analysts parsing Microsoft's recent revelations about the next generation of Windows are split on the risks posed by focusing the update on touch technology and the needs of the consumer market.

"They're betting the farm on this one," said Wes Miller, an analyst at Directions on Microsoft who was part of the vendor's Windows team from 2000 to 2004.

Miller said that Microsoft must avoid alienating the enterprise customers that drive Windows revenue. "Microsoft's problem is, how do they keep the existing customer base with Windows while addressing touch?" Miller said.

Microsoft showed off parts of the new operating system, code-named Windows 8, earlier this month at the All Things Digital technology conference in Rancho Palos Verdes, Calif., and at the Computex trade show in Taiwan.

Windows 8 is described by Microsoft executives as a "reimagining" of its decades-old cash-cow operating system. It responds to both touch and keyboard-and-mouse navigation and can run a wide range of devices, from small tablets to large desktop systems.

Gartner analyst Michael Silver said that while Microsoft had to create a "next-generation lighter-weight OS" like Windows 8, it's likely that enterprises will initially skip the new release, just as most did with Windows Vista. Microsoft itself endorsed that tactic by recommending that businesses now deploying Windows 7 stick with their plans. Windows 8 is expected to be released sometime next year.

Windows 8 will run all traditional 32- or 64-bit software that now runs on Windows 7, though Microsoft said it will push developers to craft apps for it that use HTML5, JavaScript and other Web-standard technologies.

Such a plan would lead to the development of applications that in a way ape Google's online apps.

At Computex, Microsoft showed a Windows 8 prototype interface that's significantly different from the desktop interface that has generated huge profits for the company for decades.

The new Windows 8 start screen includes several large, colored application icons that look similar to those on Microsoft's Windows Phone 7 mobile operating system. Tapping an icon with a finger launches an application and allows it to take up the entire screen, without the usual Windows menus, system tray and scroll bars around the edges.

The application tiles in Windows 8 automatically display new information from the Web, such as Twitter posts, email messages and news items gathered from RSS readers, said Michael Angiulo, corporate vice president of Windows planning, hardware and ecosystem.

Many analysts are reserving their judgment on the new software, given that they still have multiple unanswered questions.

"Until they can tell us how legacy apps will run on Windows 8 on ARM, I'll have to be bearish on their chances," said IDC analyst Al Gillen, referring to the ARM processors that run many mobile devices. "So far, we don't have any idea, and it's not because we haven't asked."

"I'm more positive about this release now than I was before, but lots of questions remain," said Miller. The toughest challenge for Microsoft, he added, is simply to clearly explain its Windows 8 strategy.

James Niccolai of the IDG News Service and Matt Hamblen contributed to this story.

Copyright © 2011 IDG Communications, Inc.

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