Can Microsoft Compete in a Post-PC World?
Microsoft says it sold 100 million licenses for Windows 8 in the six months it was on sale. Not spectacular, but not bad either. But for Windows RT, Widows 8’s tablet-friendly little brother, things haven’t been so hot. Microsoft hasn’t given out numbers, but IDC estimates sales of Microsoft’s Surface RT at a bit over a million for October through March. It seems likely that combined sales of OEM RT products–all four of them–were even lower. By contrast, Apple is selling nearly 1.5 million iPads a week.
The failure of Windows RT–and it is getting very hard to call it anything else–leaves Microsoft in a terrible bind, as least a s a seller of consumer products. The post-PC era is upon us, not in the sense that traditional PCs are going way, but that they are no longer the center of the computing world, either in most people’s usage, in mindshare, or in sales. We’ve just entered this new era and it should be possible for a company with Microsoft’s resources to recover. But the first step in recovery is recognizing that you have a problem, and Microsoft doesn’t seem to quite be there yet. Consider Board Chairman Bill Gates’ comments on CNBC:
Windows 8 really is revolutionary in that it takes the benefits of the tablet and the benefits of the PC and it’s able to support both of those. On Surface and Surface Pro, you have the portability of the tablet but the richness in terms of the keyboard and Microsoft Office…. A lot of [iPad] users are frustrated. They can’t type, they can’t create documents, they don’t have Office there. We’re providing them something with the benefits they’ve seen that have made that a big category without giving up the benefits of the PC.
In other words, what people want is more mobile versions of traditional PCs, and that’s what Microsoft is determined to give them. The problem is that this is a serious misreading of why customers are flocking to tablets. Mobility is, of course, an important attribute of the tablet. But so–and here is where Gates and Microsoft go wrong–simplicity. The iPad has limitations which users accept in exchange for wonderful simplicity and great ease of use. Tablets, and especially, the iPad, have the shallowest learning curve in the history of computing. Their software does not break. The process of updating their software is simple automatic. They don’t run Office but, while this may come as a surprise to Gates, many people do not see that as a disadvantage. They are, as my colleague Ben Bajarin would put it, a great example of “good enough” computing.
So what can Microsoft do about this? I have always thought the company made a strategic mistake when it decided to adapt desktop Windows to tablets rather than follow Apple’s lead by using an enhanced version of Windows Phone. It ended up compromising both the desktop and the tablet experience (based on the reports we’ve been hearing lately, such as this from ZDnet’s Mary Jo Foley, the upcoming “Blue” update to Windows is designed more to address Windows 8’s shortcomings as a desktop OS than to rescue Windows RT.[pullquote]I have always thought the company made a strategic mistake when it decided to adapt desktop Windows to tablets rather than follow Apple’s lead by using an enhanced version of Windows Phone.[/pullquote]
Windows 8/RT was a radical step for Microsoft, but in the end it just didn’t go far enough to succeed on tablets while perhaps going too far to win friends on the desktop. A true tablet OS simply would not have a Desktop mode that depends on a keyboard and mouse for usability, and Windows RT regularly requires going into Desktop for critical tasks (we can only hope that Blue will fix this.) The vaunted availability of Office is no advantage at all for most users because the Desktop Office apps simply don’t work well on a tablet. True touch versions of Office applications are reportedly in the works, but they are not expected before late 2014.
OEMs disappointed with Windows RT are building Windows 8 tablets. The most PC-like of these may succeed as sort of Ultra-ultrabooks, Windows 8 is fundamentally unsuited to a pure tablet. It requires too much process, too much battery power, too much storage, and too much keyboard. The same OEMs, even those most loyal to Microsoft, are also hedging their bets with Android.
That may well be too late. iOS 7, expected this fall, is likely to be a major enhancement of the iPad and we may see iOS 8 before the Windows tablet software upgrade is complete. Android tablet software still lags; the operating system has not made nearly as much progress on tablets as on phones. But Google and its partners will get it right sooner or later, and probably before Microsoft.
None of this means that Microsoft is going away. It’s back-end software powers most enterprise computing and its clients continue to have a vital place in business. For some business users, Gates might even be right about tablets: they need Office worse than they need the elegance and simplicty of an iPad. But with the mass of consumers, for whom a conventional PC is more likely to be a place where they store stuff rather than do stuff, Microsoft is in real trouble with no easy way out.