Microsoft – Eagles and turkeys.

Reply to this post

The signs are good for Windows 10.

• Some of the first in-depth reviews of Windows 10 are in and while there are still some problems, Windows 10 looks to be the most promising release since Windows XP.
• The fact that the upgrade is free, the new start menu, Cortana, search and task view have all scored well with reviewers while Windows Store, the control panel and general stability all need more work.
• Despite these shortcomings, the view is overwhelmingly positive meaning that there should be very good uptake of Windows 10 during the 12 months free upgrade time frame.
• I don’t think that Windows 10 is about to kick-start the PC market back to growth, but it promises to offer a more consistent experience for users giving some much needed cohesiveness to the ecosystem.
• For the last 15 years, Microsoft has had a monotonous rhythm with its operating systems alternating between very good (eagles) and awful (turkeys).
• I suspect that this because Microsoft always runs out of time and in order to make the promised release date, it begins dropping features and cutting corners. (Windows Vista and Windows 8).
• It then spends the next 2 years fixing all of the problems in the current release, ending up with a superb desktop offering. (Windows XP, Windows 7 and I suspect Windows 10).
• This should generate some positive momentum the Microsoft ecosystem and most importantly substantially reduce software fragmentation.
• Currently, Xbox runs one version of the code while phones run another and XP and 7 dominate the PC.
• Despite being the latest OS on offer, Windows 8 runs a tiny percentage of PCs as its predecessors are simply easier to use and meaningfully superior for desktops and portable computers.
• Windows 10 will run on every device that Microsoft powers and the free upgrade should ensure rapid uptake of Windows 10 over the next 12 months.
• With 1.5bn PCs already out there, I think that the target of 1bn active Windows 10 devices by fiscal 18 is a very low hurdle indeed.
• With Windows 10 being free, I would hope that this target is reached much more quickly although corporations are going to take longer to upgrade than consumers.
• This should mean much greater software consistency across all Windows devices which will allow the user experience to be recognisable on any device.
• The fact that many more devices will be addressable with a single piece of code, will also provide a much needed boost to Microsoft’s efforts to get third party developers on board.
• If this can be combined with marketing that explains why users should engage with Windows rather than just telling them that it exists, then the ecosystem strategy should have a good chance of success.
• The ecosystem is central to Microsoft’s long term growth prospects but fortunately the shares are assuming that the ecosystem fails to get any real traction with users.
• Hence, Microsoft remains my top choice in the ecosystem as Google has just rallied past my valuation and Apple needs another product cycle to drive it further from here.