Software

Microsoft Meets Its Timely Demise—and Other Tech Fantasies


Employees assist shoppers with the Microsoft Surface tablet computer at a pop-up store in San Francisco on Nov. 23, 2012

Photograph by David Paul Morris/Bloomberg

Employees assist shoppers with the Microsoft Surface tablet computer at a pop-up store in San Francisco on Nov. 23, 2012

The beginning of the end for Microsoft was supposed to come in April 2009. That’s when, during the depth of the recession, Microsoft’s quarterly Windows sales fell for the first time in history (to $3.4 billion in the third quarter, down from $4.0 billion). Microsoft (MSFT) went through its first big layoffs during that period, and its profits shrank.

Life should be much worse for Microsoft now. The iPad exists. Windows 8, according to pundits examining a few weeks of data, is an unmitigated disaster that has done nothing less than foreshadow the demise of Office and Steve Ballmer and everything that Microsoft holds dear. Windows 8 should be a “Christmas gift for someone you hate,” according to one MIT professor. It’s sort of unclear why Microsoft even bothers at this point.

I like to refer to periods such as these as The Microdeath Dream Fantasy. It’s the five months or so that follow a launch of Windows in which all manner of experts celebrate Microsoft’s imminent demise due to lackluster Windows sales. It’s a result of the massive pent-up desire for Microsoft to fail. The company behaved in horrible, anticompetitive ways years ago and did so while foisting a series of uninspiring products on the citizenry.

The problem with the Microdeath Dream Fantasy is reality. Haters tend to forget that Microsoft derives a huge amount of revenue from corporate Windows sales tied to long-term business software purchase agreements. (Microsoft, for example, minted money during the entirety of the Vista era.) Also, let’s remember that 400 million or so PCs will be sold in 2013 and that Windows will be sitting on just about every one of those computers. This is the reason that the drop in April 2009 was mostly a blip—Windows sales have been well north of $4 billion per quarter ever since.

Are PC sales being hurt by tablets? Of course they are. Does this mean flat-to-declining Windows sales, at least for now? You bet. Did Microsoft and its $9 billion or so spent in annual research and development somehow miss a pair of computing revolutions? Oh, yes. Still, the Microdeath days remain far, far off—if only because of inertia.

What’s more, there’s something, I believe, that so many of the pundits have missed to date, and that’s the new breed of touch-ready Windows 8 laptops with which consumers are just becoming acquainted.

I like my gadgets. I’ve got Macs, HP and Lenovo PCs, an Ubuntu desktop, a Surface, an iPad, a Kindle Fire—the list goes on. At this moment, I’m using an Acer S7, a superthin Windows 8-based laptop with a touch screen. In the five weeks that I’ve had the machine, it has replaced my Macbook Pro and iPad as my favorite computing device.

There are some extremely annoying things about Windows 8. Out of the box, the S7 seemed to be having a seizure—the slightest flick of a finger on the trackpad sent the computer jumping from the glossy new Windows 8 interface to the standard old Windows interface. (This turned out to be the result of an oversensitive trackpad.) For reasons I’ve yet to determine, I can’t complete a Skype call. That Microsoft owns Skype makes this all the more frustrating. And doing basic things like flipping through tabs on a browser requires a rewiring of your PC navigation skills.

Still, there is something remarkable about these touch-screen laptops. They offer the things I love about tablets—flipping through photos with the touch of a finger, resizing text by pinching, and calling up a movie with a gentle tap on the screen. Thanks to the touch interface, these machines rival the iPad as entertainment consumption devices. Meanwhile, there’s the trusty keyboard at the ready when you need to get to work and crank out, for example, an impassioned defense of Windows 8.

Yes, some people argue that the simplicity of tablets is what makes them great and that combining play and work functions on the same machine is just clutter. That may be true, but I also think this new breed of touch-screen laptops blends the best of both worlds and achieves what once seemed impossible: They make PCs fun.

Microsoft would have embarrassed itself much less if it had delivered these types of computers two years ago. Still, Apple (AAPL) does not have a direct response to touch-screen laptops today, and I think it may need one.

Vance_190
Vance is a technology writer for Bloomberg Businessweek in Palo Alto, Calif. Follow him on Twitter @valleyhack.

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