After Dell's earnings came out on August 21st, a lot of stock analysts have been comforting themselves by arguing that PC sales will get a big boost when Microsoft's Windows 8 releases this fall.
But are they right?
I think it's a big gamble to assume that consumers are going to rush out to buy Windows 8 devices. The early reviews of the Metro tile user-interface have found it to be confusing and anti-intuitive, forcing users to rethink how they operate a computer. These certainly aren't positives.
Remember the last time Microsoft introduced a radical change to its PC operating system? It was called Vista, and to say the 2007 OS launch flopped is to put it mildly. While I'm not saying that Windows 8 is bad in the way Vista was bad, it is worth pointing out that both were radical departures from the Windows operating system that - for good or for bad - people had grown accustomed to.
At the very least, it's going to take time for this new way of computing to take off. How long? My guess is about one year, if not longer. Which means four more quarters of weakening sales for PC makers ... Dell, HP, Toshiba, Lenovo, etc. It's possible we could see early interest in Windows 8 devices between the launch and the lead up to Christmas, but then I also think it's likely that a lot of these will be returned after the holidays, once consumers have had a chance to try the new operating system. Because when people who are used to Windows 7 or an older Windows OS actually start to use the Metro styled interface, they're going to find it confusing, get frustrated, and want their old experience back. Or maybe they'll just switch to Apple. The bottom line with consumers is that they just want a computer or tablet that works and is easy to use - that's it. Only a small percentage of users want a fancy interface. The majority of people just want to be able to turn on a computer or tablet and have it work. They don't want to learn a new way of doing things, which is exactly what they'll have to do if they get a Windows 8 for Christmas.
Whether or not the Metro tile interface eventually catches on is anyone's guess. I give it a 50/50 shot. But what I feel quite sure of is that in the short-term, Windows 8 is going to face strong headwinds which will keep the adoption rate low. Consumers will hesitate over the usability factor, especially after they hear from early adopter friends and colleagues. And enterprise customers are often two years out when it comes to switching operating systems, due to the dependency their proprietary software, applications and networks have on a legacy system.
Another key factor is the peripheral devices that are supported by Windows 8. In fact, this is really the key to the whole system Microsoft has designed. The idea is that Microsoft's Windows will be the first truly cross-platform operating system - able to work effortlessly on desktops, laptops, tablets and smartphones. The company's design team is hoping that this will work in Microsoft's favor on several fronts: reduce the cannibalization of PCs caused by tablets; win back mobile share from Apple and Samsung; and drive more business to its cloud services and Office products.
The problem is that Microsoft is facing huge odds on its mobile products. Will people really line up to buy a Windows tablet? They certainly haven't for the Microsoft/Nokia Lumia smartphone, which is only expected to reach 2 percent of the US marketshare by November, according to WMPowerUser. And the key to mobile products is apps, which Microsoft still doesn't have.
It's a huge gamble that Microsoft, and, by consequence, the entire PC industry are placing on a strange new operating system that is as yet untested in the consumer marketplace.
Here are my six predictions for Windows 8:
- Sales for the Surface tablet and third-party Windows 8 laptops and tablets will be slow but healthy between the release date and Christmas. Not Apple- or Samsung-strong, but decent for a Microsoft rollout.
- But these sales will taper off after the New Year. And, in fact, we'll see a high return rate for the Windows 8 laptops. As a result, a number of manufacturers will cut their orders for the rest of the year. Prices will wall as a result, but this still won't lure in buyers. Some companies like Dell might shift their focus back to older Windows 7 version devices.
- However, if the tablets are cheap enough, most consumers will hang onto them despite the usability challenge - because it will seem easier to keep them than to take them back. Those who keep their Windows 8 tablets will gradually learn how to use the Metro style interface and this will reduce their inhibitions against upgrading to a Windows 8 laptop or desktop. Gradually, after a year or so, more of them will do this, especially if prices are extremely competitive.
- Smartphones will still be a hold out, however. It won't make sense to the average person to change to a Windows 8 phone until Microsoft has a massive app ecosystem already established.
- Enterprise users will take two years to begin integrating Windows 8 machines into their operations. This is a standard time delay in companies, because of proprietary software which is dependent on legacy operating systems and networks.
- Windows 8's user-interface is an original concept and could catch fire down the road - but it's going to take at least a year before we begin to see a healthy adoption rate for these devices, and potentially longer. And Microsoft's effort to tie together multiple devices - computer, tablet and phone - will take even longer to factor into consumer buying decisions.