Can Windows 8 save the PC from extinction?

@CNNMoneyTech September 14, 2011: 3:05 PM ET
Can Windows 8 save the PC from extinction?

Steven Sinofsky, Microsoft's president of Windows (right) and Michael Angiulo, Microsoft's vice president of PC ecosystems, demonstrated Windows 8 on a number of devices.

ANAHEIM, Calif. (CNNMoney) -- There's no question that Microsoft got the message: Mobile devices and tablets are the future of computing. Here's the next quandary: Is Windows 8 enough to salvage the PC, or is it too late?

Love it or hate it, Microsoft made a bold bet with its radically redesigned, re-engineered Windows 8. It rejected Apple (AAPL, Fortune 500) chairman Steve Jobs' declaration in March that the post-PC era has begun.

Rather than simply putting its Windows Phone software on a tablet to try to compete with the iPad, a battle all other rivals are currently losing, Microsoft (MSFT, Fortune 500) gambled that people want more out of their tablet experience. It believes that buyers -- including home users, not just office workers -- are still clamoring for storage, processing power, and robust content creation tools.

Yet consumers have been voting "no" with their pocketbooks. PC sales growth has tumbled in the United States and have even come to a screeching halt globally. The unstable economy has contributed significantly to that, but the iPad has also chomped away at the PC. When Hewlett-Packard (HPQ, Fortune 500) decided to exit the PC business, CEO Leo Apotheker cited as a prime reason that "the tablet effect is real."

With Windows 8, Microsoft is in a sense betting the house on form factor. The company believes that when people buy an iPad, what they really want is a PC on the go that's just not available to them yet.

"It looks like Microsoft is finally on the right track, writing the evolution of the Windows PC on its own terms," said Al Hilwa, analyst with IDC.

Click for a look inside Windows 8

Time is not on Microsoft's side. It's still very early on in the Windows 8 development cycle, with the developer preview just launched on Tuesday. Microsoft wouldn't say when Windows 8 will be ready for a test release, never mind general availability. Meanwhile, the iPad is already five months into its second-generation device.

"I think it's too early to call Windows 8 the revival of the moribund PC market," said Carl Howe, analyst with Yankee Group. "It's really easy to demo stuff that is completely unusable in real life -- see Windows Vista -- and sells poorly when the final product packaging is done -- see Windows Vista."

Laptop and desktop PCs will never die off entirely; the keyboard and big-screen form factor is ideal for desk-bound tasks.

But will users always need software like Windows and Microsoft Word to power those computers? Google's current batch of cloud-powered Chromebooks are more like proof-of-concept prototypes than actually useful devices, but they point the way toward a very different future of what "the PC" could look like.

Microsoft needs to steer the world in another direction.

It will have from now until Windows 8 hits store shelves to work on its sales pitch. Consumers have become accustomed to simplicity when using tablets. Microsoft may need to convince them that they're missing out on a fuller experience.

"Windows 8 certainly has potential to put Microsoft back in the consumer market," said Michael Silver, analyst at Gartner. "But the Microsoft offering will do more to converge PCs and tablets, which also may mean it will be more confusing for consumers to buy a Microsoft tablet."

Though a Windows 8 tablet would come with a distinct app advantage over the iPad -- there's more software written for Windows than the iPad -- even native software has taken a backseat as the Web continues to solidify itself as the most-used application on any connected device.

"I don't think Windows 8 can save the PC market," said Zeus Kerravala, analyst at Yankee Group. "The simplicity and portability of a tablet makes them ideal for what most people want to do with computers."

Still, others say that the PC, though fading, is far from dead. IPads are great complementary devices, but the PC is the only serious content creation device on the market. With Windows 8 could be the missing bridge between the desktop and mobile worlds.

"Microsoft has in effect thrown down the gauntlet to Apple and Google (GOOG, Fortune 500)," said Laura DiDio, principal at tech consultancy ITIC. "Microsoft said, 'Not only are we still relevant but we have every intention of giving you a run for your money and users' hearts and minds." To top of page

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