Microsoft Braces for Strategic Overhaul with Annual Updates and New Ecosystem

on Nov 30, 2012
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Windows 8 just came out and Microsoft (NASDAQ:MSFT) is already working on a new operating system – nothing unexpected given the amount of time needed to develop software of such magnitude. What is surprising however is that according to confidential sources cited by The Verge, the tech giant intends to start upgrading its Windows more frequently, about once a year, rather than two or three years, which used to be the standard.

The next update is supposedly called Windows Blue, due to be released in mid-2013 and will feature changes to the user interface and alterations to the entire platform. According to experts, Windows Blue is expected at a low price but will only be installable if the client already has an original copy of Windows 8. Microsoft will also stop accepting applications specifically built for Windows 8 and will push developers to create apps for Blue.

The new annual upgrade policy, which is yet unconfirmed by the tech giant, is part of a strategic shift aimed at keeping up with major mobile competitors Google and Apple. “It’s staying more in tune with the market,” said Rick Sherlund, an analyst at Nomura in New York, as quoted by the Financial Times. The rise of mobile devices has forced Microsoft to move towards more “lightweight apps and lightweight operating systems, staying fast and competitive”, he added.

Some experts cautioned that the new business model to be adopted by the tech giant might lead to a backlash from core users such as business customers, who would reject substantial annual revamps due to security concerns and the costs related to upgrading and retraining staff.

The FT quoted Frank Gillett, analyst at Forrester Research, who opined that users might hold back on upgrading to Windows 8 if they know a new version will soon hit the markets. This is expected to negatively affect sales of the operating system for at least three quarters.

**Xbox and Surface Pro**
This week Microsoft announced that the Surface Pro will hit the shelves in January and Bloomberg published unconfirmed rumours that the next version of the Xbox will be released near the end of 2013.
!m[Pricey Surface Pro and Much-Anticipated New Xbox Due for Release in 2013](/uploads/story/936/thumbs/pic1_inline.png)The next instalment of the world’s top-selling console is due to be released in time for holidays next year, according to people familiar with the company’s plans quoted by Bloomberg. Microsoft intends to take advantage of the Thanksgiving and Christmas sales spree but hasn’t decided whether to unveil the new Xbox at a gaming event such as the E3 show held in June or a separate event devoted entirely to presenting the console.

The new version is expected a year after Nintendo released its Wii U and just as Sony is preparing to launch an update to its PlayStation console. Microsoft managed to sell 750,000 Xbox 360s over the Thanksgiving weekend, beating expectations.
On Thursday the tech giant also announced that the Surface Pro, running Windows 8 Pro software, will go on sale in January. The tablet will be priced in the US at $899 for a model with 64 GB memory and $999 with a 128 GB memory. It will feature an Intel Core i5 processor, delivering a major graphics boost for the device. The machine is very pricey according to experts, as users will have to pay an additional $100 for the tablet cover with a built-in keyboard – one of Surface’s main features.
“At that price, by the time you add the keyboard you’re at the price of an 11-inch MacBook,” said Wes Miller, an analyst at Kirkland, as quoted by Bloomberg. “Everyone always says, ‘well, Apple is so expensive,’ but here we are in that same neighbourhood looking at houses.”

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