Windows 8: Why Microsoft's giant gamble didn't pay off

Windows 8 was designed to bridge the gap between tablets and PCs, but left customers cold. What does this mean for Microsoft and Windows 10?
Written by Steve Ranger, Global News Director

Even when it was launched, Windows 8 was seen as a gamble — but one that Microsoft had to make.

The stunning, out-of-nowhere success of tablets was making the PC look stodgy and out-of-date, so Microsoft had to show that Windows could still be relevant beyond its traditional desktop home. The company's response was Windows 8, with its colourful tiled interface and the emphasis on Windows as a touchscreen operating system for a new age of computing — a bet-the-company move, according to then-CEO Steve Ballmer.

To reinforce the shift,  Microsoft even developed its own new PC-tablet hybrid, the Surface, to show off the potential of the new operating system.

But despite — indeed, in many cases because of — these innovations, the reception to Windows 8 was lukewarm at best, forcing Microsoft to deliver a rapid update in the shape of Windows 8.1.

In February this year, Microsoft revealed 200 million Windows 8 licences had been sold in the first 15 months after its launch. In contrast, its predecessor Windows 7 sold 240 million in its first 12 months. Microsoft has not released new Windows 8 sales figures since then, other than to say it continues "to see momentum" around the OS.

Actually, Microsoft is already drawing a line under Windows 8. It was only on sale for two years at retail, until the end of last month. That's a much shorter period than Microsoft's previous operating systems, although Windows 8.1 is still available.

Windows 8 and 8.1 together still only account for around 17 percent of PCs accessing the internet, according to figures from NetMarketShare. In contrast, Windows 7 has 53 percent of the total market, and even the elderly and out-of-support Windows XP has 17 percent. Windows XP hasn't been available to buy in the shops since June 2008 or be installed on new PCs since October 2010, although it was on sale for almost nine years, hence the huge user base out there.

As for the Surface, despite many intriguing features, it has not taken off in the way Microsoft hoped or analysts expected (one went as far as to predict 12 million sales for the original Surface in its first 15 months).

In many ways, analysts say, Windows 8 didn't bridge the divide between tablets and PCs so much as fall into the chasm between them.

One fundamental problem: countering the threat of tablets and touchscreens may have been a priority for Microsoft, but it was largely irrelevant to the majority of its customers, especially in business. With Windows 8, Microsoft had over-corrected for its previous lack of attention to mobile.

According to Al Gillen, vice president at analyst firm IDC, Microsoft was faced with a difficult decision on just how important touch-centric use was compared to the classic keyboard and mouse combo.

"I'd argue that the company over-rotated to present a touch-first experience at a significant expense to the classic keyboard/mouse user," he said.

"My sense is that Microsoft was targeting tablet users, and let's remember that Windows 8 was supported by Microsoft Surface, and the company really wanted to deliver a product that illustrated its commitment to, and understanding of, what a touch UI really is."

Getting touchy about touchscreens

The trouble was most customers, and most of their PCs, weren't ready for touch.

"The goals of Windows 8 were very different to previous operating systems. It was a time when tablets were going through a lot of hype and huge sales and Microsoft didn't really have the OS to properly address that market. The idea with Windows 8 was to offer something that would run on tablet form factors and that's why the new UI was created," said Annette Jump, research director at analyst Gartner.

The problem was that while the new user interface worked quite well on tablets, it didn't work as well on non-touch devices, which were the vast majority of devices in use.

Most notebooks on sale didn't have touchscreens either, but those that were came with a $150 premium for touch, which annoyed consumers even more. Gartner's Jump said all of this created lots of negative feeling around Windows 8, especially as consumers didn't have the option of going back to previous versions of the operating system, as business customers with enterprise licence deals did. For consumers, Windows 8 was the only thing anyone was selling.

Microsoft had tried too hard to shift users to the new mobile-first UI: for example, the biggest outcry was about the abolition of one of the smallest features of Windows, the start button.  

A small button in the bottom left hand corner of the screen doesn't make much sense on a smartphone or tablet, so it was removed. But to many PC users the start button was their default way of navigating their device — losing it hurt, and became symbolic of the bigger issues with Windows 8.

Windows 8 in business

On the enterprise customer side there were different issues. CIOs worried about the reaction of staff and the need for retraining to use the new interface. Touchscreen PCs were (and still are) a rarity in business, which meant that most companies couldn't use the new touch interface anyway, and didn't want to buy new hardware to do so.

Many enterprises were ramping up the migration to Windows 7 because a large chunk had skipped Vista, remaining on Windows XP instead. Those businesses were in no rush to start migrating all over again. "There wasn't a clear source of demand for the OS," said Forrester principal analyst JP Gownder.

Since then, in a tough financial climate many CIOs preferred to stick with the last stable version of classic Windows, Windows 7, for as long as possible, and opted to skip Windows 8 if they could.

The timing of Windows 8 was unfortunate for business users too. As Windows 8 was being launched, many companies were wondering how to replace their antique Windows XP deployments. But these were exactly the sort of late-adopters who would be scared by the radical new design of Windows 8.

The reality was that commercial customers that were well into deploying Windows 7 were not in a position to jump to a next version product anyhow. "Most corporate users downgraded Windows 8 PCs to Windows 7," said IDC's Gillen.

Windows 8: Its place in history

While Microsoft addressed some of this with Windows 8.1 (in particular the return of the start button), consumers and business have still not warmed to the operating system. And now that the door is gradually closing on Windows 8 (although it's going to be supported until 2023), what will be history's verdict on one of Microsoft's most ambitious attempts at reinvention?

"The intention was there to be innovative, to try to develop something that was a reimagination of Windows," said Forrester's Gownder. "Although there was a lot of grand ambition and great ideas, the execution of it left users a little bit cold."

And, as Gartner's Jump points out: "The goal of Windows 8 was to establish Microsoft's presence on smaller tablet form factors and I think here they haven’t been successful, they haven't succeeded because if we look at tablets it's still dominated by iOS and Android."

For all of the bet-the-company hyperbole of the launch, Microsoft is much bigger than just one version of its operating system. Windows 10 is well on its way to release and has be shaped by the reception of Windows 8, featuring a more conciliatory pairing of old and new to cater for both desktop and mobile users. Enterprise customers and developers are being asked for feedback much earlier than with Windows 8 to head of any potential problems quicker.

Since Windows 8 was launched the tech landscape has changed again: tablet growth has slowed and, after years of decline, PC sales have stopped plunging and may even grow slightly next year. While numerous, the changes to Microsoft's design philosophy may have been necessary to provoke bigger changes in the PC market such as the emergence of hybrid devices like the Lenovo Yoga range.

JP Gownder notes: "On a sales and penetration basis, Windows 8 is not going to be seen as a historic high for Microsoft, it will be more in the Vista category than the [Windows] 7 category simply because people haven't taken to it. The bottom line with OS upgrades is in the numbers."

He added: "I know the [Windows] team really well. I don't want to denigrate their efforts, those folks had some great ideas and did a lot of hard work, but this is one of those cases where the ultimate proof comes from adoption."

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