Installing applications on a PC is still a huge problem. Software downloads live all over the Web. Users must know about them and where to find them before they can download them. Then they have to install them, which can often be a frustrating experience for computing novices.
Microsoft (NASDAQ:MSFT) is attempting to fix this problem by mimicking the app stores of Apple (NASDAQ:AAPL) and Google (NASDAQ:GOOG) (NASDAQ:GOOGL), which were created in the infancy of smartphone adoption. Apple implemented its version of the app store for Mac in 2011, but it too has struggled to overcome developers' old habits. Microsoft's app store has arguably fared even worse and suffers from a large number of spammy and counterfeit apps.
With the release of Windows 10 just weeks away and a heavy focus on the Windows Store in the newest iteration of the OS, Microsoft is working to cull and curate the apps in its app store.
How did we get here?
Microsoft introduced the Windows Store along with Windows 8 in 2012. In 2013, Microsoft started offering developers a monetary incentive to add their apps to the app store -- $100 per app, for up to 10 apps for each of Windows 8 and Windows Phone. As a result of this tactic, Microsoft was able to grow the number of apps in the Windows Store, but many developers took advantage of seemingly low standards from Microsoft to upload spammy, counterfeit, and potentially dangerous apps.
Last fall, Microsoft removed 1,500 apps from its app store after reports pointed to these problems with the Windows Store. But 1,500 apps is just the tip of the iceberg for Microsoft, which now boasts over 200,000 apps in its app store. Late last month, Microsoft announced that it will make further improvements to the quality of the apps in its app store by removing mispriced and misleading apps, and setting higher standards for future apps.
Because of Microsoft's early tactics, the Windows Store suffers from a high percentage of low-quality apps, which makes the platform unattractive to quality app developers. While quantity is important, quality is even more crucial. Apple's App Store is successful because it attracts top-quality developers looking to target Apple's premium audience. Google Play is able to attract quality developers because of Android's scale.
Microsoft has offered very little incentive for successful developers to put their apps in the Windows Store.
Microsoft has struggled mightily to get users to upgrade to Windows 8, which is currently the only operating system that supports the Windows Store. As of April, fewer than 15% of PC users have Windows 8 or Windows 8.1 installed. Most users upgraded to Windows 7 after the expiration of Windows XP support last year, and 58% of PC users now have Windows 7 installed on their machines.
That's why Microsoft is offering a free upgrade to Windows 10 for most Windows 7 and Windows 8 users. It set a time limit of one year to give users an incentive to upgrade sooner rather than later. Microsoft is also unifying Windows 10 with its mobile operating system, so it's one OS for all devices. If successful, Microsoft will create a much larger audience for the Windows Store and its developers with the release of Windows 10.
Coupled with a reduction in low-quality apps, massive scale will attract high-quality developers. The potential to easily reach a wide audience is what makes developers put their apps in Google Play instead of just asking users to sideload the app from their websites. That's why developers are willing to give up 30% of their revenue to Google or Apple. Without scale, the 30% cost for developers in the Windows Store remains unattractive.
Microsoft's decision to give away Windows 10 to consumers means that there's a lot riding on making up for the lost revenue through services like the Windows Store. After a decline in Windows licensing revenue from consumers and the poor reception for Windows 8, Microsoft needs to spur rapid adoption of Windows 10 and the Windows Store. It will be interesting to watch how this strategy plays out over the next year.
Adam Levy owns shares of Apple. The Motley Fool recommends Apple, Google (A shares), and Google (C shares). The Motley Fool owns shares of Apple, Google (A shares), and Google (C shares). 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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