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Friday, April 5, 2013

Windows 8 Is Bad For Business, and Microsoft

Microsoft is in deep trouble, and if you run a business or enterprise you should be concerned. They have apparently suffered a fatal case of iPad Envy. In a failed attempt to thwart the iPad, the momentum of Microsoft's bad decisions now threatens to destabilize the 30-year-old Windows ecosystem.

The short version of this post is that business and enterprise computer buyers have no reason to prefer Windows 8 over Windows 7. There are very few new features worth chasing, and the training and support costs required to roll out Windows 8 don't make sense.

Berkeley Logic customers should avoid buying Windows 8 computers for their businesses. Customers should continue to order computers from resellers like Berkeley Logic, since we can get new Windows 7 computers from the big distributors until the end of 2014. Online shoppers can find Windows 7 computers today at Amazon.com and directly from the Dell, HP, Acer and Lenovo websites.

This is a change in course for me. Throughout my career I had regularly been a proponent of buying the latest versions of Microsoft OS and applications. But, the problems are so serious now that I strongly advise against Windows 8 at this time. It is disconcerting to me to break a decades-long recommendation because now I cannot give a good prediction of what my customers will be buying for IT solutions five years from now.

Microsoft’s reaction to Apple's iPad tablet computer is what is killing them. The three-year-old iPad has the momentum to replace Windows as a preferred platform for IT in the home. Only Google's Android, and its cousin Amazon Kindle Fire, has gained headway into the home tablet market.

While its days in the home may be numbered, Windows still matters plenty in business and enterprises like governments, schools and nonprofits. The world has spent the last twenty years investing trillions of US$ into IT, much of it going into Windows clients and servers. This investment has yielded tremendous productivity gains in businesses and enterprises of every size. There are now tens of trillions of US$ in global and local economic activity being facilitated by Windows computers every year.

Despite this success in the enterprise, the PC industry in is crisis over a lack of growth. In the last decade the PC  industry went from a growth industry to a commodity durable goods industry. Except for China, India and Africa, it seems like of the rest of the world has bought all the PCs they will need. Today the PC industry is all about replacements and incremental improvements. We aren't even sure if next-generation IT will even need a PC or if those emerging markets will make do with mobile platforms.

Even if the PC market is not growing, IT departments and small enterprises are happy with Windows as a platform, even as a desktop client. Even with flat growth, the PC industry is huge, at over $800B in revenue and 361 million units shipped in 2011 according to IDC (see this Guardian article for a great analysis of IDC research). The problem is the PC industry isn't growing in North America, Europe and Japan. This is a problem for the big hardware makers because Wall Street and investors don't care about industries without a growth trajectory.

The fact the PC market isn't growing can explain why we are four months into the Windows 8 era, and this new OS has barely made a dent in the IT world. Unfortunately, the lack of adoption could be due to a bigger problem. In an effort to appease itself Microsoft has made Windows 8 unattractive to their core audience: enterprise IT departments.

How did all this happen? It started when Microsoft took much too long to react to the quantum leaps in touch and mobile computing made by Apple and Google in the late 2000's. Android, iPhone and the iPad quickly made Microsoft's phone and touch solutions seem pathetic. Instead of reacting to touch and mobile innovations like Bill Gates reacted to Netscape's Internet innovations in the 1990's, Microsoft's CEO Steve Balmer allowed infighting, politics and lack of focus take over.

While we don't know the real inside story, there is evidence of discord in the ranks. Soon after the November 2012 launch of Windows 8, Steven Sinofsky, president of the Windows division, resigned with little explanation.

The result of Microsoft's machinations has given Windows 8 a dualistic view of IT. One view, Microsoft claims, is the future. This future consists of a touch interface with active tiles and device independence through use of the cloud. Previously known as Metro, the new official term for the tiles interface is the Modern UI.

The other view is the familiar desktop. And never the twain shall meet. You have to flip your screen back and forth between the desktop and the tiles. Yes, there is a way to park tiles next to the desktop, but practically speaking, most Windows 8 desktop and laptop users simply stay in the desktop mode to use their familiar applications. We have yet to see if Windows 8 tablets will gain any traction in the home, much less the enterprise.

The dualism is where the problem lies for enterprise users of Windows desktop computers. All business users care about is using their familiar applications. Whether it's Quickbooks, Adobe CS, Microsoft Office, or even Internet Explorer, the introduction of the Modern UI does nothing to enhance the use of those applications. In fact, all the tiles do is get in the way of using productivity apps. The Windows Modern UI is decidedly anti-productive.

The biggest anti-productivity feature of Modern UI is what IT departments have to do integrate Windows 8 into their enterprise. They will need massive training and help-desk programs to support the introduction of a radically new user interface. And for what? To help users learn how to get back to the desktop so they can get work done?

The Modern UI is so useless to enterprise IT that it threatens to bury all the good things about Windows 8, and there is plenty to love about the goodies in Windows 8 and Server 2012. Windows 8 is faster, more reliable, very compatible, and quite a bit more manageable. Windows 8 and Server 2012 are designed to work together very well for large enterprises, and there are a ton of new storage management and remote access features that could be worth deploying.

But why ship what is clearly a dual-mode UI, even on Server 2012? Microsoft decided to stand up to the iPad in order to maintain their relevance in mobile platforms and the home market. My guess is that Microsoft finally saw what the iPad and Android were doing, and decided it had to finally react.  This is when they had their all in moment, and decreed that the Modern UI had to be on everything. Unfortunately for the IT world, it looks like the decision to graft Modern UI on top of planned major upgrades to Windows OS was a huge mistake. 

When Ballmer and Sinofsky approved the plan to have Desktop and Modern UI in Windows 8 is when Microsoft management started to make their fatal errors. Their next major mistake was the introduction of Windows RT.

Now, four months after the introduction of Windows RT, this ARM-based version of Windows is an afterthought. In fact, it damaged the Windows brand by introducing another set of complicated explanations of what Windows really is. Right at the launch of a new touch UI, they had to explain why you couldn't run x86 applications like Adobe Flash on a Windows computer. It looks like Microsoft botched a few billion in R&D making Windows run on a new CPU/APU architecture.

The Microsoft Surface hasn't done anything to help Windows 8 adoption either. Surface is another multi-billion dollar mistake.

How is the failure of Windows 8 relevant to everyday business owners and enterprise managers? The answer is simple and unnerving: uncertainty is entering the PC business. Up until now, it seemed reasonable that we could count on Microsoft being relevant by advancing the state-of-the-art in IT. We were counting on that leadership to help leverage the trillions of US$ invested in an enormous, global infrastructure that impacts billions of lives. 

Instead of leadership, Balmer and Sinofsky have delivered uncertainty. Microsoft literally bet the farm that they could make a difference in mobile and touch computing. Instead of making a difference, they diluted and damaged the Windows brand. Their failure to make any impact at all in touch or mobile computing means that leadership is now compromised. 

Take the simple premise of how to advise your friends and relatives about what PC to buy for the home. I’m sure many of you steer people to Apple products, but I’m also sure you also know plenty of happy Windows users who don’t want to convert. 

What do you tell someone who has an old Windows XP or 7 computer and needs an upgrade? Do you tell them to buy a Windows 8 laptop at BestBuy or Fry’s? I am now wary of telling individuals to invest in Windows, because I can see how it could become a dead end choice. Take the sum total of mistakes and one has to conclude the Windows 8 launch is totally botched and a major setback. This new uncertainty about Microsoft worries me.

If Microsoft’s leadership is diminished, this means we will depend more on vendors who will see the light and help to maintain the status quo for IT departments. I am encouraged by Dell’s move to go private because, in theory at least, that will allow them to focus more on customers.

Hewlett Packard's CEO Meg Whitman, on the other hand, has recently stated that tablet computing and Windows 8 is their future. If you follow my logic, that could be a fatal choice for HP too. Perhaps getting out of the Wall Street spotlight is what this industry needs to help with further consolidation of Windows investments. Maybe we will get lucky and Dell will ship an OEM version of Windows 8 without the Modern UI. 

The story of Microsoft's failure to maintain its relevance as a new technology vendor is a familiar one in American business. Once, Microsoft was a leading catalyst for wealth creation and the spread of the information age. Today, instead of innovating the company bears the yoke of supporting a huge installed base. That limits Microsoft’s ability to react quickly and effectively. It's not unlike what has happened in steel, railroads, autos, telecom and other big American innovations that bestowed monopoly-status upon a revolutionary innovator.

In the mid-1990’s Microsoft under the leadership of Bill Gates managed to “turn the supertanker on a dime” by quickly adopting Internet Explorer as a response to Netscape. Will this latest attack by Apple and Google, Microsoft under Balmer’s leadership has failed to react in time. As it stagnates, Microsoft is now not a single entity but competing technical, political and business interests.

There is no doubt we have entered a new post-Microsoft age of uncertainty in IT. For now, businesses and enterprises should continue to buy Windows 7 and invest in 2008-era Microsoft technology. Enterprises should hold dearly to their investments and hope that vendors like Dell will come to their rescue and keep things afloat. And, hopefully we can look to innovators like Apple and Google, plus others yet unknown, to continue the advance of the information age.

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