Fin8 Executive Summary

To enable better understand the key drivers for the launch of WIN8, we need to travel back in time to year 2006-2007, when the WINDOWS long awaited VISTA operating system was launched. The product initially was received well, with around 55million licenses sold world-wide in the year 2007, which enabled the company to show strong top line results in line with market expectations for the fiscal year 2007. But the replacement and projected new volumes that was expected post 2007 did not materialize and the digital right management (DRM) insistence strategy that the company instituted led to most of OEM’s displeasure. Infact the biggest OEM “DELL” even stated that to enable their growth of PCs they would offer customer Microsoft previous OS i.e.

Overall in the industry Apple and Google were already ramping plans to enable platform based HW, SW synthesis leading to greater future monetization capabilities. Within the overall market, most of the corporates were strongly entrenched in the WINDOWS XP world, which united the Windows9X and NT universes, which were floating around in the enterprise space. The requirements with regards to security features were too heavy for VISTA and Corp IT had no incentive to migrate, given that all users have one office PC that accompanies them. According to Forrester research only 8.8% of enterprise universe is on VISTA OS1. Not to deny the fact that enterprise market critically contributes to the top line of the company. On the same note, we need to be aware that the company tried in the past to move their OS to a SaaS (software as a service) model, unfortunately due to technological immaturity and customer acceptance these strategies were withdrawn/placed in back burner. Overall the impact of the VISTA debacle had a resulting effect on the home/consumer PC market, as office users were primary home based customers. Mutually reinforcing challenges contributed to the not so great performance of WINDOWS VISTA

Practically this chart counts PC, smartphones and tablets and clearly the shift is seen from single vendor to multiple vendors. Ironically Microsoft near monopoly has been shifted to oligopoly and at the expense of the company Apple and Google have become formidable competitors. So If I as Microsoft sees this happening, there is a strategic necessity to act and do something to remedy the situation in my favor. First thing I need to do is slide the market share loss and second need to think about gaining share. The Operating systems industry has network effects at play, what this implies is that with the kind of scenario I am seeing, I not only have to worry about my own survival, I need to think about ecosystem/platform i.e. the OEM’s/SI’s/Consultancies that are dependent on me. I am the keystone in this system, which needs to reignite faith back on the platform, else there is a higher risk of all these players adopting alternative platforms/ecosystem thereby completely decimating my market based advantage. There are pipeline work that Microsoft has done and is doing to launch the next generation OS, which is supposed to be last in series of the products. But that’s few years away and am looking at cross-roads. Additional challenges happening is that OEM’s, who are Microsoft’s loyalists started embracing Chrome OS as an alternative. This situation is