Can Microsoft’s Windows 9 Succeed Where Windows 8 Failed?

News has leaked that the company plans to introduce the new version of its popular operating system in late September.

Aug 23, 2014 at 4:00PM

In his short time as CEO of Microsoft (NASDAQ:MSFT) Satya Nadella has shown little desire to stick with things that aren't working. He made massive cuts to the company's workforce, unbundled the Kinect motion sensor from Xbox, and closed down the division making original television-style programs for the game console. Now he's moving on from one of the company's biggest failures by pushing up the release of WIndows 9 instead of continuing to patch up the little-liked WIndows 8.

Though the company has not confirmed the information, The Verge reported Thursday that sources familiar with Microsoft's plans say Microsoft has tentatively planned a press event for Sept. 30 to introduce the new Windows, which has a codename of "Threshold." This news follows a similar report earlier in the month from ZDNet, which had pegged the announcement as coming in late September or early October.

Whatever the exact timing is, it appears the days of WIndows 8 are numbered. 

Why was Windows 8 not popular?
Fans of Windows 8, of which I am one, would say that it's an idea that's ahead of its time. The OS dropped the traditional Start screen and menu in favor of an icon-based interface similar to the one used on an Apple (NASDAQ: AAPL) iPad. It was still possible to get to a version of the traditional desktop but it lacked the Start menu, which was the path to opening programs on previous version of Windows.

The biggest challenge for Windows 8 is that it's optimized to work on touchscreen computers but many of the desktops and laptops sold with the OS lacked that capability. Using the icon-based interface without touch is not particularly intuitive and has a bit of a learning curve.

When customers upgraded Windows previously, say from Windows XP to Vista or Windows 7, new features were added but the core interface was basically the same. Windows 8 was designed for a touch-based world, which is likely the direction computers are going in, but that world has not arrived yet. 

How bad is Windows 8 doing?
Windows 8, which includes the original launch version and the Windows 8.1 update, is being used as the operating system on 12.48% of all desktop and laptop computers as of July, according to NetMarketShare. That's well less than immediate predecessor Windows 7, which has a 51.22% share, and the defunct Windows XP at 24.82%. The XP number is particularly disturbing as Microsoft stopped supporting the OS in April and made a push for customers using it to upgrade to Windows 8.  

The company posted the following text, along with a countdown clock on its website in advance of the day support ended.  

There will be no more security updates or technical support for the Windows XP operating system. It is very important that customers and partners migrate to a modern operating system such as Windows 8.1. Customers moving to a modern operating system will benefit from dramatically enhanced security, broad device choice for a mobile workforce, higher user productivity, and a lower total cost of ownership through improved management capabilities.

Windows 8 has not sold well despite Microsoft pushing it very aggressively. Though there are some neat features offered in the icon-base interface, including "live" tiles which update things like sports scores, stock prices, and news headlines, the OS largely alienated desktop users.

Despite the failure to get people to adopt Windows 8, revenue for the Windows division has stayed remarkably similar for the last three fiscal years. The business segment had $18.8 billion in revenue in 2011, $18.84 in 2012, and $18.68 in 2013 though operating profit dropped for the division in 2013 to $8.9 billion from just over $12 billion in each of the two previous years. 

Why Windows 9?
Before Nadella took over, Microsoft seemed committed to offering updates to Windows 8 that restore features users wanted. As recently as April ZDNet was reporting that its sources inside Microsoft were saying the company would be releasing an update that would put the traditional Start menu back. In a post on the Windows blog in April Microsoft acknowledged that it needed to update the OS faster and more often.

As we've said before, Windows 8.1 Update along with the new Server and Embedded updates reflects Microsoft's commitment to providing a more rapid cadence of feature improvements for our customers. More than ever, these updates are driven by customer feedback and the need to refine and innovate to meet their growing needs.

If the company is listening to user feedback than the number one thing it needs to do is restore the Start menu. Doing that in Windows 8 may have worked, but doing it under a new product name -- presumably Windows 9 -- may resonate better with customers. The Windows 8 name has a taint with users that may be hard to overcome. Launching a new OS under a new brand name while highlighting that you listened to what people were saying has been a successful strategy for other companies.

The most famous example would be when Coca Cola (NYSE:KO) angered its user base in 1985 by launching New Coke to replace its classic formula. That move was met with consumer outrage and the company ultimately brought back "Classic Coke" less than three months later, propelling the brand to new heights.

Microsoft has a history of launching a Windows version people don't like (Windows Vista) and rebounding with one they do (WIndows 7). WIndows 8 may be a failed experiment but the company can recover from it if it makes the launch of WIndows 9 about giving the people what they want.  

Leaked: Apple's next smart device (warning, it may shock you)
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Daniel Kline is long Microsoft. He really does like Windows 8. The Motley Fool recommends Apple and Coca-Cola. The Motley Fool owns shares of Apple and Microsoft and has the following options: long January 2016 $37 calls on Coca-Cola and short January 2016 $37 puts on Coca-Cola. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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