Microsoft Corp. announced this week a major new update to the company's Windows 8 operating system. Code-named "Windows Blue," the update is due out at some point later this year, and represents Microsoft's attempt to address a deluge of (positive and negative) user reaction to Windows 8.
But it also comes at a time when the entire personal computer industry is struggling to make the switch from desktops to mobile devices in time to cash in on the hundreds of millions of cellphone users who are expected to upgrade to smartphones in the coming years. Windows 8 was intended to bridge the gap between desktops and mobile devices by essentially marrying the best features of both worlds into a single operating system.
So far, however, desktop sales continue to plummet, while the mobile industry soars. Windows Blue will likely address a host of performance and feature issues, but it will also offer clues as to how Microsoft is handling the transition to a mobile world.
Microsoft is so far refusing to give out too many details of what Windows Blue will actually offer. In general terms, Tami Reller, Microsoft's chief marketing officer and chief financial officer, said the software update "will deliver the latest new innovations across an increasingly broad array of form factors of all sizes, display, battery life and performance, while creating new opportunities for our ecosystem." The update is also part of a much larger transition for Microsoft, as it changes its focus from products to services. As such, Blue will likely include myriad features designed to make cloud-based Microsoft offerings, such as the company's Web-based Outlook.com e-mail service, work more seamlessly on a variety of Microsoft and non-Microsoft devices.
THE PC CLIFF
So far, Windows 8 sales have not been terrible. This week, Microsoft announced it has sold some 100 million Windows 8 licences – up from 60 million in January and largely in line with the same sales figures for Windows 7. But the mix of products on which the new operating system runs is changing quickly. According to International Data Corp., PC sales plunged 14 per cent in the first three months of 2013, almost twice as big a drop as the firm had previously predicted. In fact, the 14-per-cent drop represents the largest three-month decline in worldwide PC sales since IDC began keeping track of that data almost 20 years ago. The firm laid some of the blame for the steep decline on Windows 8, which is designed primarily for touchscreen and mobile devices, although it also runs on traditional desktops.
THE GOLDILOCKS OPERATING SYSTEM
Microsoft's challenge over the next few years will likely be to build a one-size-fits-all solution for desktop users (who still make up a massive Windows user base) and mobile users (who represent the fastest-growing consumer demographic). Windows 8 marked Microsoft's boldest attempt so far to build such an operating system, but the sharp decline in desktop PC sales indicates it has not managed to appeal to all consumers equally. Windows Blue will probably contain myriad fixes and an updated design to further address the fine (and perhaps ultimately non-existent) balance between the mobile and desktop worlds. But Microsoft's challenges are only going to grow more complex, as the company tries to juggle even more devices, such as its Xbox gaming systems and other companies' computers and phones – all when consumers are starting to demand a seamless, uniform experience, regardless of what screen they're looking at.
THE NEW NORMAL
As Microsoft focuses more and more on mobile devices, its fundamental product cycle is also changing. Traditionally, the company released minor patches and fixes periodically, but major updates only every few years. With Windows Blue, some analysts think this is going to change. "I think the broader thesis is that you can't be rolling out updates, in this day and age, every three years," said Colin Gillis, technology analyst at BGC Financial. A more fast-paced update cycle would put Microsoft in line with many of its major competitors in the mobile operating system industry, and would also allow the company to respond more quickly to changes in the marketplace – something Microsoft had been criticized for in the past, and which it tried to do with Windows 8.