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Microsoft needs to rethink their platform strategy


Why force users to upgrade from XP or into Windows 8? They
might as well migrate away from Microsoft altogether.

While the mobile platform race garners the most attention these days, the fate of the legacy PC ecosystem is crucial for one company: Microsoft. How they play their cards will have repercussions for the entire tech sector.

Microsoft has long profited from being a de facto monopolist with a huge user base locked into their ecosystem. Their upgrade cycles with a new OS every few years have kept up their revenue streams. The inherent flaws and instabilities in the Windows platform have usually made upgrades worthwhile as each new OS (3.1, 95, 98, NT, ME, 2000, XP, Vista, 7) has been an improvement over an even worse performing predecessor.

To push the user base forward to the next platform, Microsoft has left the legacy user base stranded. Support for new hardware and APIs has not been added to a legacy OS. Support and security patch services have had an end date. The ever increasing hardware performances has provided additional incentives for users to upgrade with new machines. This strategy was a breeze from Windows 95 to Windows 7, but now the engine is about to break down.

Hardware performance of the aging PC platform is now adequate enough for most users. These days there is less of a compelling need to upgrade a four year old PC. But the major threat to Microsoft is the risk of pushing users away from the Windows ecosystem by forced upgrades. Microsoft may be about to make a serious blunder on both ends of their product pipeline.

On April 8, 2014 Microsoft will stop supporting Windows XP with updates and new security patches. XP’s market share is falling but it still has a 24 percent market share of the global market as of January 2013. Even if the user base is less than 10 percent next year when Microsoft terminates XP, we are talking about 50 to 100 million users. Microsoft’s reckless termination of Windows XP could wreak havoc and damage the company’s reputation. Malware hackers and criminals will keep newly discovered security holes to themselves and will wait to unleash them until April 9th next year, when they know that Microsoft will no longer provide patches. It would seem that Microsoft’s corporate DNA is still stuck in the mindset of the arrogant monopolist from the 1990s and that they take for granted that this abandoned user base will stay with the Windows platform no matter what.

To add insult to injury, Microsoft is not only planning to leave legacy XP users stranded but the upgrade from Windows 7 to Windows 8 is a discontinuity that will force users to rethink whether they should stay with the Windows platform at all. Win8 represents a radical departure from the traditional Windows UX/UI with a steep learning curve. Windows 8 is adapted for touch screens. Bravo. But the hybrid touch/traditional UI/UX is a step backward for users that want to work in the way they are used to. It will slow down productivity for the billion users who are accustomed to the mouse, cursor and keyboard paradigm. Users have accumulated a 15 year learning curve speeding up their mouse, eye, keyboard, screen and motor skills. Throwing this human investment away would be madness. Touch screens are a significant technological innovation with disruptive potential. But if you are an office worker that spends 8 hours a day manipulating the same corporate applications in front of a screen, a touch screen is hardly an improvement. With a touch screen, users have to constantly move their arms and if the display is vertical it means lifting your arms in a way that will be physically exhausting after less than an hour. The slowdown in office productivity due to bad ergonomics and forced relearning could be significant, though I think corporate IT-managers will be aware of these drawbacks and keep Win8 out.

  • Microsoft needs a strategy to defend their installed base at any cost

Microsoft seems to be oblivious to their weakened strategic position. Compared to 2003, users today have a plethora of alternatives (Apple/IOS, web/HTML5, cloud apps, SaaS, Android, Ubuntu, etc.). The lock in to Windows is not as strong as during the prime PC era. The huge legacy of corporate systems makes Windows sticky but the ease of developing new apps will eat away at this exit barrier. The cost and time of developing complex apps has fallen by a factor of magnitude over a decade.

Microsoft wants to push their entire user base to one platform (their latest). But considering the risk that Windows 8 might be a failure they need to rethink. By signaling that older platforms are to be phased out they are actually encouraging skeptical users to look elsewhere if they don’t like Microsoft’s upgrade cycle.

  • Here is what Microsoft should do:

Develop a major upgrade for Windows XP with some of the more modern security features included. Announce this upgrade (“Windows XP II”) in Sep 2013 and sell it for around $15 (upgrade only) with support until 2021. Extend the free security updates for the old XP for one year to give the user base time to migrate. Microsoft should also consider marketing XP II for new users at a higher price point.

For Win7 and Win8, Microsoft should announce that this represents a fork and that they are committed to the support and upgrades of the older platform (Win7) for users that don’t want the new touch based UI/UX.

Microsoft has to accept that their total market share is the sum of several platforms. Even with a 10 percent market share, each platform is large enough to be an attractive, cash flow positive business for any company. Milking a legacy platform such as XP is humiliating for Microsoft but beggars can’t be choosers. XP II would be a highly profitable business area and it would keep up the installed base. Whether this is enough to prevent or slow down the decline of Microsoft remains to be seen. (This is of course not a comprehensive strategy for Microsoft but only addresses the limited issue of OS upgrade cycles.)

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