Windows 8 Sells Best On New TabletsWindows 8 Sells Best On New Tablets

8 Things Microsoft Could Do To Save Windows 8

8 Things Microsoft Could Do To Save Windows 8(click image for slideshow)

When Microsoft announced in its recent earnings report that Windows revenue had increased, the company scored an ostensible victory over the many critics lambasting its newest operating system, Windows 8. It was a hollow victory, however, given that the gains relied on deferred revenue, and that Microsoft declined to dissect how much of the revenue came from Windows 7. For the purposes of assessing Windows 8's progress, in other words, the earnings report offered few new details.

Separate studies published this week by research firms Forrester and Strategy Analytics seek to fill in some of the gaps in Microsoft's report, and although the news isn't stellar for Windows 8, it's not that bad, either.

Forrester found that although Windows 7 is the most popular OS in the enterprise, with 47.5% of the market, almost two out of every five machines still run its predecessor, Windows XP. The subtext, given that Microsoft will stop supporting XP in less than a year, is that a lot of companies are still scrambling to update their aging systems. With Windows 8 still a niche player in the workplace, the setting is right for Windows 7 to maintain robust sales. This is good news for Microsoft in the short term, as it means Win8 has been able to endure growing pains without negatively affecting Microsoft's bottom line. Even so, Windows 7 sales don't silence ongoing uncertainty regarding Windows 8's long-term viability.

[ Many are giving touch-enable Windows 8 a wide berth. Read Tell Me Again: Why Rush Into Windows 8?. ]

Microsoft claimed in January that 60 million Windows 8 licenses had shipped and that the OS was broadly keeping pace with Windows 7. This optimism seemed incongruous with external viewpoints, which have cited poor PC sales and a variety of other factors to argue Win8's real-world impact has been substantially more mild.

There also have been indications that, among enterprise customers, few XP holdouts are jumping directly to Windows 8, whose touch-oriented interface has so far struck business users as more burdensome than empowering. The result is that Win8 has been able to struggle without negatively affecting Microsoft's bottom line. But with the new OS's potential unclear, Microsoft's long-term outlook is more enigmatic.

That's where the Strategy Analytics data enters the equation. The firm found that 3 million Windows 8 tablets were sold in the first three months of 2013, and that the OS commanded 7.5% of the tablet market. This number is by no means a home run; Apple sold 19.5 million iPads during the same period, and Android is poised to surpass Apple for the industry's overall lead. But based on separate estimates released in March by market watchers Net Applications and StatCounter, Win8's 7.5% share of the tablet space is around double its overall market penetration.

Windows 8 defenders have argued that the OS is best enjoyed on touch-enabled devices. With PC sales down, however, many Win8 licenses have been installed, to lackluster effect, on previous-generation hardware. That the OS's tablet momentum evidently outpaces its overall growth by such a wide margin reasserts this notion. As a Windows 7 replacement, in other words, Microsoft's newest offering hasn't performed well. But as a foray into the tablet space, Windows 8 has actually fared decently.

There are many reasons to expect this growth will continue. One is Windows 8.1, a forthcoming update, previously code named Windows Blue, that is expected to improve many of the UI's most divisive elements, including potentially reinstating the Start button and more smoothly integrating its traditional desktop environment with its tactile-themed Live Tiles UI.

Small tablets are another avenue for sustained growth. Win8's current tablet share has been amassed without an entrant in the industry's fastest-growing race: the market for small, cheap devices, currently dominated by the iPad Mini, Nexus 7 and similar models. But Microsoft has acknowledged, after months of rumors, that 8-inch Windows 8 tablets are coming. Outgoing Intel CEO Paul Otellini suggested these new products will be priced aggressively. Between Windows Blue and a slew of new devices, the platform should only expand its reach into the mobile arena. The question is, by how much?

Windows 8 has a lot of ground to make up. It would be surprising if the OS can challenge Apple for second place in the tablet market, even if Microsoft and its partners' new offerings deliver. Between the mediocre Win8 outlook at the consumer level and a lack of enthusiasm for the OS among enterprises, Microsoft continues to face unanswered questions. Analysts expect Microsoft to be a huge player for years to come, but few anticipate Microsoft can remain as dominant as it's been in the past.

Tapping into this theme, Forrester's report emphasizes that Windows 7, although a phenomenal success by any measure, is not as ubiquitous as Windows XP was during its heyday. XP once claimed more than 80% of business desktops, and even with a number of enterprises currently updating their systems, it's not clear if Win7 can reach such stratospheric heights. Forrester noted that OS X, though not a challenger to the Windows majority, has become more accepted as a business platform. Such erosion in Microsoft's traditional user base, as well Windows 8's modest gains in the consumer and bring-your-own-device segments, reiterates what many analysts said after Microsoft announced its earnings: at most businesses, IT departments will have to support multi-OS environments because the days of a de facto Windows monopoly are over.

Some version of Windows will be one of these supported platforms, of course, and for certain users, Microsoft's flagship product will continue to be the only realistic option for years to come. But as more platforms jostle for enterprise adoption and influence, and as consumerization trends continue to affect IT policies, it's not clear where in the pecking order Microsoft will ultimately land.