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Tuesday, May 7, 2013

After Bumpy Start, Microsoft Rethinks Windows 8

REDMOND, Wash. - Windows Blue, the code name for an update to the Microsoft's flagship operating system, sums up the current melancholy in the PC business pretty well, though Microsoft didn't intend it that way.

PC shipments are slumping and the declines in the industry have gotten worse, not better, since a major overhaul of Microsoft's operating system, Windows 8, came out last fall. If it were possible for PCs to sing, there's little doubt they would be singing the blues.

Microsoft's basic vision for Windows 8 has not changed - an operating system flexible enough to run on traditional PCs, tablets and everything in between - but the company is for the first time confirming that it is making changes to the software to address some of the problems people have when using it. In a recent interview at Microsoft's headquarters, Tami Reller, the chief marketing officer and chief financial officer of the Windows division, revealed that Windows Blue will be released this calendar year and will include modifications that make the software easier to learn, especially for people running it on computers without touch screens.

“The learning curve is real and needs to be addressed,” Ms. Reller said.

Ms. Reller wouldn't get into the specifics of how Microsoft plans to do that, saying the company will reveal further details over the next several weeks in the lead-up to Build, a Microsoft developer conference in San Francisco. But she dropped some hints.

Two of the biggest changes Microsoft made with Windows 8 was the new tile-based interface of the software and the removal of the start menu for launching programs, a feature of the operating system for almost two decades. In recent weeks, tech news sites have been reporting that Windows Blue will bring back the start menu.

Even more significantly, according to these reports, Microsoft will allow Windows users to configure their systems so they start on the traditional-looking Windows desktop when they start their systems. Microsoft didn't allow that initially, steering all users to the new tile interface, which is best suited for people running systems with touch screens.

Ms. Reller wouldn't confirm those changes, but she said Microsoft had changed how it was training sales associates in retail stores as they present Windows 8 to customers so that they emphasize how important the desktop remains as a part of the software. “We started talking about the desktop as an app,” she said. “But in reality, for PC buyers, the desktop is important.”

Ms. Reller said Microsoft's own research on Windows 8 usage patterns showed that customer satisfaction with the system was on par with that of Windows 7, when the Windows 8 users being analyzed have tablets or other systems equipped with touch screens. Of people with conventional PCs, operated by keyboard and mice or trackpads, Ms. Reller said, “We need to help them learn faster.”

In another development, Ms. Reller said Microsoft was allowing its hardware partners to make Windows 8 tablets with screen sizes in the range of seven to eight inches, smaller than the nine-inch-plus tablets that have been available so far. That could give Microsoft a stronger answer to the iPad mini, which has been a strong seller for Apple.

Ms. Reller described Windows Blue several times as an “update” to Windows 8, though she wouldn't say whether the software would be available free to people who have already bought Windows 8 computers. The company has already issued hundreds of smaller updates to Windows 8 that are automatically downloaded to users' computers.

Ms. Reller said Microsoft had sold about 100 million licenses for Windows 8 since the software was introduced, roughly in line with the number of Windows 7 licenses sold in the comparable amount of time after its introduction. While research firms like IDC are showing double-digit declines in PC shipments, Ms. Reller said those figures reflected sales into retail channels, not to actual customers. She said Microsoft was seeing consistent growth in PCs going through the online activation process that everyone with a new PC has to do.

“New PCs coming online is far steadier than what you see from IDC,” she said. “That's encouraging to us.”

Still, Ms. Reller said the 100 million figure was less than it could have been had there been more touch-based Windows 8 systems available when the product was introduced before the holidays last year. Supplies of Windows 8 touch systems were limited in retail stores, especially outside the United States, in large part because of production delays for a new Intel processor. Ms. Reller said that supply problem should be remedied in the coming months.

“For back-to-school and holiday, we'll be very pleased,” she said.