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."

Although Windows 8 will run all traditional 32-bit or 64-bit software that now runs on Windows 7, Microsoft will also push developers to craft apps using HTML5, JavaScript and other Web-standard technologies, in a way aping the kind of online apps that Google markets.

Others were even more bullish on Windows 8's chances, and saw the transition as not so much a gamble by Microsoft, but the very best choice available.

"It would be a risk not to do what they're doing," said Sarah Rotman Epps, an analyst with Forrester Research. "I see a risk by doing nothing."

Epps ticked off three elements to Windows 8 she believes are critical to the operating system's future relevance, including bringing Windows to devices powered by ARM's low-powered processor architecture, the touch-first model and the stress on new applications written with HTML5.

"Those three elements of Windows 8 support the behavior changes taking place in PC use," Epps said. "I don't see the PC as going away, but the PC is going to change."

And from her point of view, Windows 8 is the right move by Microsoft to stay abreast of those changes.

"Windows 8 will help stave off the defections from both Microsoft's partners and its customers," Epps argued. "Microsoft is transforming Windows as its defense against defection."

Directions on Microsoft's Miller seconded Epps, to a point.

"I think what they did was to play the best hand that they had," Miller said, referring to Microsoft's need to retain the desktop OS market while tossing its hat in the tablet ring. "This is as good an opportunity as they have, and one of the boldest strokes they've taken in a long, long time."

Gartner's Silver chimed in, too. "Microsoft needs to remain relevant on the desktop, but it's not really just about the desktop anymore, is it?" said Silver.

But with so few details known about Windows 8, and so many questions unanswered, skepticism remained a theme among analysts.

"I'm more positive about this release now than I was before, but lots of questions remain," said Miller.

"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 Gillen. "That's my biggest concern....Will legacy software run on ARM, [and] if so, how? So far, we don't have any idea, and it's not because we haven't asked."

That's not the only question analysts have that Microsoft hasn't answered about Windows 8. For Miller, the toughest chore Microsoft has is just explaining its Windows 8 strategy in a clear, concise way that everyone can understand.

"Microsoft's biggest challenge between now and RTM [release to manufacturing] will be to clarify for press and analysts the idea of 'two modes' -- touch and the desktop -- of Windows 8," Miller said.

Gregg Keizer covers Microsoft, security issues, Apple, Web browsers and general technology breaking news for Computerworld. Follow Gregg on Twitter at @gkeizer or subscribe to Gregg's RSS feed . His e-mail address is gkeizer@computerworld.com .

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