As the dominant operating system in the PC market, Windows revenue has obviously dropped with the platform as a whole in decline. Meanwhile Microsoft has watched as Apple has not just reinvented the personal computing market with the iPad, but also managed to maximize profit margin at the same time. Beginning with Windows Phone 7 and continuing with the Windows 8 family of operating systems Microsoft appears to be betting on combining their established licensing model and Apple-like levels of control to regain their OS dominance.
Continuing a strategy first introduced with Windows Phone 7, Windows 8 and its derivatives (Windows RT and Windows Phone 8) are designed first and foremost as clients for Microsoft's software and media distribution efforts. It's not a coincidence that Windows Phone and Windows RT (their ARM-based Windows 8 tablet platform) are configured to prevent users from installing unapproved software and despite their insistence to the contrary the reason isn't security. It's the opportunity to make themselves a gatekeeper for apps and media and cut themselves in on any profits from selling those commodities.
A large part of that vision is already built-in to every Windows 8 computer, regardless of form factor or whether it's the ARM (RT) or x86 variant. That's a client for their app store, simply called the Windows Store. On Windows RT tablets it will be the only way for third parties to distribute software for the platform. As is already the case for Windows Phone 7 (and will be for Windows Phone 8), a developer's license is required if you want to install apps any other way.
More to an ecosystem than the device
The problem with this thinking is that the initial success of the iTunes app store wasn't so much about the hardware or OS as it was the instant userbase. By the time Apple added app support to the iPhone not only were there already millions of users chomping at the bit to get apps, there was already a thriving developer community created by first generation jailbreakers.
The most important thing for developers is users. For all of Android's fragmentation issues, the enormous number of potential customers ensures lots of developer interest. A plan which requires you to first attract developers and use that
Of course Apple's primary revenue source isn't apps or media. It's the devices themselves. As much as they would like to demand a fee comparable to what Apple makes from an iPhone or iPad Microsoft ultimately has to split the profit with a hardware vendor. That's where a pair of new strategies come in. The first is increased licensing fees from bundling Microsoft Office with every copy of Windows RT. On top of that Microsoft will also be selling their own line of hardware called Surface which will compete with their numerous OEM partners.
Of course that's not so much an issue for consumers as it is for the hardware vendors Microsoft is competing with. Perhaps down that line that may change, particularly if those OEMs decide to stop making Windows devices and you aren't impressed with Microsoft's hardware. For now though it's probably not worth worrying about. What's much more pressing for consumers, or should be for anyone considering a Windows tablet, is the difference between regular Windows 8 and Windows RT.
Not quite what they promised
From the initial announcement in 2011 that Windows 8 was being redesigned to run on the ARM processors which dominate the mobile device market until more than a year later Microsoft representatives including CEO Steve Ballmer and Windows Division head Steven Sinofsky made a lot of vague statements about Windows 8 which intimated that the ARM version could do do everything the traditional x86/x64 version was capable of.
They didn't actually come out and say that, but in hindsight there can't be any question they knew that's the impression people were getting and yet they completely avoided any mention of differences between them. That's certainly true if you're content to get all your software from Microsoft's app store. On the other hand if your interest in Windows revolves around the wide array of software available for Windows today you will find Windows RT sorely lacking.
Imagine if instead of simply expanding iOS a little for the iPad Apple had gone back to the drawing board and created a separate version of OS X and rebuilt it with a tablet interface. Then imagine they announced the iPad, rolled out the same changes to OS X and the iPhone, while keeping the app installation restrictions on the iPhone and also extending them to the iPad. Furthermore imagine if they advertised these tablets as running "full" OS X even though none of your old software would run on it and even if it would you couldn't install it.
That's essentially what Microsoft has done with Windows RT. The single platform model slightly expands Windows Phone because it theoretically allows Windows apps to run on Windows Phone. The physical differences between a phone and a tablet or desktop make it hard to guage how much difference it really makes, but it's definitely an addition.
Defined by its limitations?
A Windows RT tablet is supposed to be "real" Windows but actually it's entirely incompatible with not just the existing Windows software, but also the way most of that software is acquired and installed.
If that Windows experience doesn't matter to you, a Windows RT tablet may be just what you want. It certainly could be very compelling if you also use a Windows Phone. However if you don't own a Windows Phone and don't care about the Windows experience it's not clear what you get from a Windows RT tablet. It has the limitations of iOS without the benefits of Apple's ecosystem and offers far fewer apps than either iOS or Android.
On the other hand if you do want that Windows experience, or at least the option to have it for certain tasks, a x86-based Windows 8 tablet may be a much better fit. It also could be the biggest obstacle for Windows RT. We will examine that in more detail in the next installment.
Written by: Rich Fiscus @ 5 Oct 2012 1:39