By Shira Ovide
Microsoft Corp. on Wednesday unveiled more of Windows 10, the
latest version of its flagship operating system that is aimed at a
world increasingly mobile, social and cloud-enabled.
The software giant showed off the new look at an event at its
headquarters in Redmond, Wash. Microsoft said the Windows 10
upgrade will be free during its first year for those using Windows
7 or later systems. The company hasn't yet provided the software's
specific release date, expected later this year.
A lot is riding on the new operating systems as the current
version, Windows 8, failed to gain traction. Fewer than 15% of
Windows computers run it, according to analyst Net Applications.
Many users who tried it on a computer with keyboard and mouse
complained about the touch screen interface.
In prior previews of Windows 10, the company acknowledged it
went off the rails with some elements of the earlier version,
called Windows 8. (Microsoft unaccountably skipped Windows 9.)
Microsoft is de-emphasizing a screen offering smartphone-like apps,
introduced in Windows 8, that confused some users with its fusion
of mobile and PC conventions. Microsoft officials will continue to
stress that Windows 10 is more like the Windows that people have
come to expect.
"What Microsoft has got to do is continue to provide a stable,
familiar-to-use version of Windows," said David MacDonald, chief
executive of Softchoice Corp., which sells technology and services
to companies. Mr. MacDonald said few of his corporate customers
installed Windows 8 on workplace PCs, preferring to stick with
prior versions.
Microsoft also hopes Windows 10 will fulfill its long-standing
promise to establish a common software foundation for PCs, tablets,
smartphones and Xbox. Those products now require four fairly
distinct operating systems. Unifying them could allow for seamless
activities across devices, such as letting Xbox users shift in
midgame from the console to a Windows PC.
The larger benefit of a cross-device operating system, however,
is creating a bigger base of users to appeal to software
developers--a crucial constituency for Microsoft's flailing
smartphone business. Microsoft's Windows Phone software is used on
just three out of 100 new smartphones sold world-wide, and one
reason is a lack of popular or buzzy mobile apps. Microsoft hopes
to burnish its allure to developers with the promise that apps
created for Windows phones will also run on hundreds of millions of
Windows PCs.
Windows' role in generating revenue makes every new version a
high-stakes venture. The PC operating system accounted for about
19% of Microsoft's revenue in the year ended June 30, and it
generates roughly 30% of the company's earnings, Nomura Securities
stock analyst Rick Sherlund estimates.
Those figures actually understate the operating system's
financial potency, because sales of Office are closely tied to
sales of Windows devices. The sum of revenue related to Windows and
PC versions of Office accounts for roughly 80% of Microsoft's
operating profit, according to estimates from Jefferies &
Co.
Windows 10 may usher in some business-model tinkering. Microsoft
executives have hinted the company will experiment with new ways to
make money by pitching people on add-on services or apps, such as
Microsoft's Skype video-calling service, OneDrive file storage and
digital video downloads.
Some analysts have also speculated Microsoft could give some
people the option to buy Windows 10 as an annual subscription,
rather than a one-time purchase. That could shift the Windows
revenue engine into overdrive.
Write to Shira Ovide at shira.ovide@wsj.com
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