Is Microsoft Corporation Setting Itself Up for a Huge Win -- or a Massive Mistake?

Microsoft (NASDAQ: MSFT  ) will stop supporting its massively popular Windows XP platform after April 8, ending a stellar 12-year run for the aging system. There are no ifs, ands, or buts about it: Software updates and other technical assistance for Windows XP will simply no longer be available.

You might think it a purely academic problem. What computer user in their right mind would still cling to XP more than a decade after its original launch? Microsoft has moved on to Windows Vista, Windows 7, and now Windows 8. Even the first version of Vista had its security and functionality updates shut off three years ago!

But XP is still run on nearly 30% of all PC systems, according to recent research from Netmarketshare:

The research firm bases its numbers on how often each operating system is used to access its sample of real Web pages. From this angle, Windows XP remains the second-most popular platform today, far ahead of Windows 8 or Apple (NASDAQ: AAPL  ) OS X systems, and second only to Windows 7.

Keep in mind that Microsoft doesn't want us to move into Windows 7. The end of XP support is supposed to push everyone into Windows 8. This event should -- in theory -- trigger an epic upgrade cycle to Microsoft's latest and greatest software.

That's the potential upside of this move. If consumers and corporate buyers react like they're supposed to, you should see the XP slice of that pie chart shrinking while the Windows 8 and 8.1 portions explode.

But what if Windows 8 is unloved for a reason? What if Windows 8 (and all its variants) goes down in history as a rerun of the Windows Vista debacle?

It's entirely possible that former XP users will go a different route than Microsoft's preferred option. Keep in mind that people who still stick with Windows XP today might not be the most sophisticated computer-users on the planet and that Windows 8 is a radically new experience. The question of better or worse might not even factor into the decision, so long as the learning curve for the replacement system isn't too steep.

Apple could see a surge in Mac sales as disappointed XP fans look for another user-friendly platform -- and Apple's systems are billed as the biggest no-brainer upgrade out there. Corporate users could swing over to Linux systems, leaning on years of Linux system vetting and adoption, rather than throwing resources into exploring a new and radically different Windows 8 platform. For investors, this vector would be a big catalyst for Linux veteran Red Hat (NYSE: RHT  ) , with smaller handouts going to other Linux vendors.

Microsoft might end up with higher Windows 7 sales, rather than the pricier and heavily criticized Windows 8 version. Windows 7 still looks and feels a lot like XP, and it certainly looks more familiar than Windows 8's Metro design. Redmond has so far refused to move back to the old desktop-based model, favoring Metro's big, touchscreen-friendly tiles, and that looks like a big mistake.

Plenty of XP users will probably shrug and move on -- now exposed to the horrors of unpatched security holes. Hackers have seen this event coming from a mile away, and they may have saved some of their dry powder to use in this new era of unprotected XP computing. The PR backlash could be huge when 30% of all desktop PCs suddenly run into brand-new hacking threats with no protection from Microsoft's automatic updates. Again, keep in mind that we're talking about lots of unsophisticated users and some corporate systems that simply cannot be upgraded. Virus scanners and malware protection may be entirely new concepts to many of them.

You may have figured out where I think this story is going next based on the column inches given to the upside and downside alternatives. Indeed, I'm afraid Microsoft is setting itself up for a huge mistake here.

It could be healed in at least two ways -- push the XP expiration date back another few years and wait for those aging computers to die a natural death, or make an XP-style interface the default experience in Windows 8 -- but I'm not holding my breath waiting for either one. And Microsoft is too busy looking for its next CEO to really focus on making its most important product win again.

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So, Microsoft has underperformed the Dow Jones Industrial Average (DJINDICES: ^DJI  ) since Windows Vista was introduced. Be prepared for another few years of Microsoft losing to the Dow as this story plays out, including a big drop in April when the hammer actually falls on XP to trigger the final catalyst.

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Read/Post Comments (12) | Recommend This Article (5)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 27, 2014, at 3:25 PM, E5Bravo wrote:

    I'm an admitted android/Google lover for the majority of my technology choices. I must say however that for tablet I'm absolutely sold on Windows 8.1. This article, and many like it, seek to mislead folks citing that the "Metro" interface is some huge departure from what EVERYONE is used to about the Windows desktop. My tablet happens to boot up into desktop mode, a simple configuration even for me, If I want my tablet to act like a tablet I simply swipe right and pull up the "Metro" live tiles which suddenly gives me tablet/touch look, feel and experience. Really the best of both worlds. Just saying.....

  • Report this Comment On January 27, 2014, at 4:25 PM, rayj00 wrote:

    It should be against the law to one day EOL Windows 7!!!

  • Report this Comment On January 27, 2014, at 5:17 PM, kevinlovesxp wrote:

    Windows XP will never die and im not giving it up no matter what Microsoft says. Im not worried about viruses and i know how to keep my computer working well.

  • Report this Comment On January 27, 2014, at 9:56 PM, madav1138 wrote:

    Another Microsoft bashing article from the Motley Rag. Big surprise they think upgrading to Apple is a "no brainer". Apple is the most over hyped company ever to exist in history. Their products are not fool proof, and require weeks of retraining on how to use the OS, just like a windows product. Or this fantasy that Macs never get hacked or get viruses, pure lies. This particular Apple fanboy is implying that windows 8 is not secure, and that you need all kinds of anti-virus which is also false.

    Wake up and see who is selling you a bill of rotten goods, this author certainly is.

  • Report this Comment On January 28, 2014, at 7:42 AM, compdave wrote:

    We talk about the destruction monopolies create yet Microsoft seems to dodge being labeled as one. Microsoft is the most arrogant company there is; their way or no support.

  • Report this Comment On January 28, 2014, at 1:27 PM, 45ACPbullseye wrote:

    There is another likely outcome since the majority of XP users are on desktops. Windows 7 is a logical choice for users who prefer the functional utility of a desktop. Dell recommends it, over Windows 8 for desktop users. Upgrades from 8 to 8.1 have not gone smoothly based upon reports from Dell customers. Another option discussed by desktop users is to run 8.1 using a Windows 7 "shell" in order to get the best of both worlds. My sense is that unless you have a touchscreen, there is no reason not to go with Windows 7, a robust, familiar operating system that will have to be supported for many years to come. Best, Bill

  • Report this Comment On January 28, 2014, at 5:32 PM, IloveLinux wrote:

    XP was great for its day. That day is over and no, MSFT should not extend its support anymore. If you don't want to buy a newer computer then use Linux. That if your system won't support Windows 7 or 8. As for Apple. I love OS X but their products are pricey and for those curious you can learn to use them in a few days and Apple stores offer FREE help.

    Without patches and security updates your XP machine is vulnerable. You may never have a problem or you could. Your credit card info and identity could be compromised. Look, a new Windows 8 system can be bought for $300.00. Chromebooks go for the same or less. Spend the money if you can spare it for something new and more secure or try Linux. Linux Lite, Lubuntu, LXDE, Q4OS are great and FREE.

  • Report this Comment On January 28, 2014, at 6:39 PM, CatchMe wrote:

    If the users are dumb enough to still stick with XP, there is no way they will be able to learn and live with Mac OS.

  • Report this Comment On January 28, 2014, at 10:18 PM, RickMetzger wrote:

    I've read that Apple chose not to force the use of the same OS on its Macintosh and other-device users. Seems to me that this is the critical error Microsoft made - trying to force desktop and laptop users to adopt an OS seemingly designed almost exclusively for touch-screen interfaces. Might be the future, but it's not today or tomorrow. Pretty ironic. I am very happy with Windows 7, after being very happy with Windows XP. Had Microsoft done what Apple did - two operating systems for two obviously-different types of platforms - I think they would not be in the trap that they are today.

    It wasn't broke, but they fixed it. Apparently Bill Gates either retired too "totally" or he didn't have the vision I assumed he'd have.

    I haven't given up on a possible course-reversal, but I'm dismayed. Unfortunately, XP is too-big-to-fail. How are poor villagers in rural Botswana or other such places going to replace their operating systems? It is not just an upgrade, even to Windows 7 - it requires more CPU power, RAM and hard drive space, at a minimum.

    Looks like New Coke, Part II.

  • Report this Comment On January 29, 2014, at 11:59 AM, saphirantcross wrote:

    While Windows 8.1 is taking steps to make desktop users feel better, it still means Microsoft's choice of gestures for touch/mouse control are weird and unintuitive. Perhaps they chose these controls because they want to patent them and not worry about lawsuits from Google or Apple (i.e.: Apple has a gesture to remove active apps by swiping it up... Windows does on a tablet and a computer it by swiping it down. Not a big deal to the tech saavy, but mainstream users are hopelessly lost.)

    Perhaps Microsoft will learn in time for Windows 9, which is in development right now. But it seems like Microsoft's answer is throwing away the Windows 8 name, not fixing the resistance users have to the UI. The mouse's recent demise, as it were, was greatly exaggerated.

  • Report this Comment On January 30, 2014, at 2:40 PM, suziathome wrote:

    Because I have no need for a more sophisticated QuickBooks version, I've stuck w/ my 2009 version (XP based). I only have one employee and don't need to email invoices to my clients. However, my XP computer did crash 15 months ago, and I could not find a XP replacement that kept working. Thus, I reluctantly went to Windows 7, BUT the salesman said I could partition my hard drive to allow me to run XP on part of my computer, so I could keep my QuickBooks 2009. Being an "old broad" who doesn't particularly care for technology, I taught myself how to do the partition, loaded XP on it, and was able to continue using my QB 2009. I'm wondering if the decision by Microsoft not to support XP in the future is finally going to force me to buy new QB software. QB is worse than Microsoft in that it will only support a version for 2 years (used to support for 5 years). When you're a small company that doesn't use most of the apps, it seems a waste of good money.

  • Report this Comment On January 30, 2014, at 10:12 PM, TheeMadCatte wrote:

    The article is slightly incorrect. Microsoft WILL be continuing to support Win XP for years to come, but only for those that purchase a Windows Custom Support contract from them and are Windows Premier Support customers already. Prices are on a per-device cost. Rumor has it that Microsoft may make these patches to the general public for a fee, but then again they may not.

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