The word on the street about Windows 8 is mixed at best. It's Microsoft's tablet PC play -- so much so that the desktop is getting short shrift. This doesn't seem wise, even if desktop sales are being displaced by tablets.
Can Microsoft really afford to alienate one of its biggest market segments for a whole product cycle?
In a word: Yes. In fact, doing something this risky might well be vital to Microsoft's survival. Here's why.
1. Windows 7 isn't going anywhere
Windows 7 was and is Microsoft's biggest desktop success story to date. It knocked the bad taste of Vista out of everyone's mouth and gave desktop and conventional notebook sales that much more of a bulwark against sagging sales, due both to a poor economy and conventional PC form factors being eaten into by tablets.
The latter, tablets, bothered Microsoft a good deal more than the former. To that end, Windows 8 has been first and foremost about putting a foot in the door of the tablet market. It doesn't matter if few people upgrade to Windows 8 and Windows 8 sales are confined to new tablet machines. The bet for Windows 8 will be hedged by the continued presence of Windows 7.
Microsoft -- and its attendant hardware partners -- hedged its bets back when Windows Vista was released as well. The company saw that XP was, even after all those years, a strong seller, so many PC makers shipped with the option of either XP or Vista as a pre-load. Today, you simply have a choice of Windows 7 flavors. Even the die-hard XP user base is slowly eroding as older XP machines are retired.
When Windows 8 comes out, odds are the Vista-era strategy will be dusted off and reused. Expect to see Windows 8 machines pushed side-by-side with Windows 7 systems. Windows 8 will make some sales inroads -- as long as Microsoft has some presence in the tablet space, it'll happen -- but it won't be nearly enough to justify reducing Windows 7 to an endangered legacy offering. The fact that Windows 7's full support timeframe has been extended to 2020 is further evidence of that.
2. Microsoft can afford to lose a product cycle
The desktop is not the only source of income for Microsoft. According to the company's FY12 Q2 filing, a little less than 25 percent of the company is about Windows on the desktop. The business, server, and entertainment/devices division all make up chunks of the pie that are at least as big, if not significantly bigger.
Even if Windows 8 stiffs horribly, the company is so diversified now, the effect will not be huge. Plus, many innovations from Windows 8 (virtualization, a more compact kernel, and so on) are being rolled into the next iteration of Windows Server products. These are things that, again, the poor performance of Windows 8 by itself will not affect; those innovations are already being put to use elsewhere. What I'd really like to see is for many of those same things to be rolled back into Windows 7 via SP2 or SP3, but I won't hold my breath.