Microsoft (NASDAQ: MSFT ) is planning to get rid of one of its operating systems. At the UBS Global Tech conference last week, Microsoft executive Julie Larson-Green said that Microsoft wasn't "going to have three [operating systems]" going forward.
Right now, Microsoft has Windows Phone, Windows 8, and Windows RT. Given that Microsoft's hardware partners have all rejected Windows RT, the ARM-optimized version of Windows seems like the obvious of the three to go.
Two operating-system philosophies
Microsoft has always differed with its competitors, Google and Apple, when it comes to drawing a line between traditional PC form factors and mobile devices. All three companies offer at least two operating systems, but apply their operating systems very differently.
Apple and Google use their mobile operating systems, iOS and Android, on both smartphones and tablets. Their traditional PC operating systems, Google's Chrome OS and Apple's OS X, remain on traditional PC form factors.
Microsoft, on the other hand, offers its pure mobile operating system, Windows Phone, strictly on smartphones, while pushing Windows 8 on everything else -- desktops, laptops, tablets, and convertibles. Windows RT is, in a sense, also a pure mobile operating system, being offered strictly on tablets; but it looks identical to Windows 8, and largely functions the same, relying heavily on keyboard and mouse input.
Microsoft's outgoing CEO, Steve Ballmer, explained how Microsoft thought about the two computing environments back at the D8 conference in 2010:
I think there will exist a general purpose device that does everything you want... Will there also be a device that you keep in your pocket? Because I think there's a fundamental difference between small enough to fit in a pocket, not small enough to be in your pocket. There will be some distinct difference in usage patterns between those two devices.
Microsoft wanted to offer one computing environment for smartphones (Windows Phone), and one for everything else (Windows 8).
Windows Phone 8 gets bigger
But Nokia's new phablet, the Lumia 1520, stretches the limits when it comes to fitting in a pocket. The Windows Phone-powered device sports a 6-inch screen, making it larger than the Galaxy Note 3; Samsung's flagship phablet running Google's Android is a bit smaller, with just a 5.7-inch screen. Sure, the Lumia 1520 might fit in some pockets, but certainly not all.
Could Windows Phone get even bigger? The jump from a 6-inch phablet to a 7- or 8-inch tablet is not much of a stretch. Ovum's analyst for devices and platforms, Tony Cripps, believes that it makes sense for Microsoft to scale up Windows Phone further, offering Windows Phone-powered tablets (via V3).
Windows Phone tablets could help Microsoft close the gap
Windows RT tablets have basically been a failure -- some of Microsoft's hardware partners, like Hewlett-Packard, have avoided offering them entirely. Others, like Dell, experimented with Windows RT tablets, but quickly discontinued them.
The aversion is understandable -- consumers have avoided Windows RT. Microsoft was forced to take a $900 million writedown back in July after its own Windows RT tablet, the Surface, sold more poorly than anticipated.
The lack of mobile apps may have been the key reason for Windows RT's failure. Apple's iPad has hundreds of thousands of apps written for it specifically. Tablets running Google's Android have far fewer, but Google's operating system compensates for its weakness by scaling up existing Android apps written for smartphones.
Windows RT has had to rely on the Windows 8 app store, which continues to be plagued by a key lack of mobile apps, including HBO Go, Pinterest, and LinkedIn, not to mention the absence of popular games including Plants vs. Zombies 2. Windows Phone, in addition to being much more touch optimized than Windows RT, also suffers from a lack of apps, but appears to be gaining some momentum among developers with the recent additions of Instagram and Vine.
Offering Windows Phone-powered tablets would be, in a sense, conceding defeat, by acknowledging that Microsoft had it wrong when it came to drawing the line between mobile and traditional PC form factors. But if Microsoft heads in that direction, it could offer a tablet experience more competitive with Apple's and Google's offerings.
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