Is the Windows Era Really Over?

Windows era is over. Microsoft shares fell over 11% on Friday, the biggest decline since the financial crisis. The company whiffed on earnings, as consumers abandoned Microsoft's Windows operating system. Can Microsoft Corporation survive in a post-Windows era? How Microsoft plans to save Windows -To rejuvenate Windows, Microsoft Corporation has undertaken a few initiatives. For starters, it cut the price of its Surface RT tablet by 30%. There is now a $150 difference between Microsoft's tablet and Apple's competing iPad. In theory, that could help to save the Windows RT platform. For Windows 8, Microsoft Corporation has rolled out an update that brings back the start button. It also partnered with its OEMs to reduce the cost of full Windows 8 tablets. Asus, for example, sells a tablet that's less than $500, but runs full Windows 8.

It isn't going to work

But, these moves aren't going to change anything. Microsoft's mobile strategy has been a complete disaster. The company had to take a $900 million writedown on its Surface RT tablet. It should've never expected to sell many in the first place. The Windows RT platform suffers from a severe lack of mobile apps. Even Facebook Inc has not bothered to put an official app on the platform, only now preparing to launch one nine months after the platform was rolled out. At the same time, even $350 is too much for a tablet. Apple's iPad Mini retails for $330 and sells more than the full-size iPad, while other popular tablets like the Nexus 7 and Kindle Fire HD start at under $300. Moreover, full Windows 8 on a tablet isn't necessary for most people. The advantage in having full Windows 8 is that a user can run just about any PC software developed in the last 15 years -- but why would they? Old software has not been optimized for tablet use, and the cheap Windows 8 tablets use weak Intel Corporation (NASDAQ:INTC) ATOM processors incapable of replicating the full desktop or laptop experience.

Google will be the new king of the operating system market

Google Inc looks set to take the crown from Microsoft as the world's dominant operating system provider. By giving Android away for free, Google has been able to conqueror the mobile operating system market. Gartner expects Android to have largely supplanted Windows by 2017. Given the current trends, that prediction looks likely to come true. In many ways, it's reminiscent of what Microsoft did to Netscape in the mid 1990s. For a few years, Netscape was the premiere Internet browser. Then, Microsoft Corporation introduced Internet Explorer, and Netscape crumbled. Microsoft displaced Netscape by giving Internet Explorer away for free. Nowadays, it seems insane to pay for a mobile browser -- but back then, Netscape cost money. Perhaps, years from now, people will think the same thing about operating systems, wondering how anyone could ever be willing to pay for them.

Can Google benefit from Android's dominance?

That said, just because Google displaces Microsoft doesn't mean that it will be as successful. Android benefits the search giant by encouraging people to use the company's Internet services, but it doesn't take a direct cut. Someone who owns an Android, for example, is much more likely to use Google Inc's search engine, its Gmail, and its social network Google+. But it isn't a clear financial transaction like Microsoft Corporation's licensing fees. Moreover, with Android being open source, companies like Baidu.com, Inc.and Amazon.com, Inc. have been able to fork it, pulling out Google's services and inserting their own. While Android's dominance should be seen as an opportunity for Google Inc, it should not be viewed as a guaranteed success.

Can Azure and Office 365 save the company?

If Microsoft has any chance of replacing its Windows division, it will come from Azure and Office 365. Office 365 is Microsoft's cloud-based Office subscription service. As Microsoft said on its earnings call, it's now running at a $1.5 billion annual revenue rate. If Microsoft can continue to add Office 365 subscribers, it could be very profitable for the company. Meanwhile, Azure is Microsoft Corporation's public cloud service -- it allows companies to store their cloud software on Microsoft's servers. Azure has attracted a lot of attention -- hedge fund ValueAct put $2 billion into Microsoft on the strength of Azure alone. Microsoft claims that half the Fortune 500 now uses Azure in some capacity, and has recently brought Azure to China.
Well, if Windows 8 is lacking apps (as in, those used through the Modern UI), then that should explain just how bad the situation is with Windows in general. Microsoft hasn't effectively sold the masses on Windows 8, and while it's improving things with 8.1, it's hard to say if that's going to be enough. Microsoft needs to take a hard look at things, and (ideally) begin listening to its customers. When your customers are not happy, that's a problem, and bad business.