Microsoft Corporation (MSFT) Prepares to Back Off — Again

Over the past year, Microsoft Corporation (NASDAQ:MSFT) has taken two very large risks. Neither has panned out the way that the software behemoth had envisioned, and it’s now being forced to back off of both of its big pushes.

There’s been plenty of controversy over Microsoft’s original Xbox One plan. The ideas of used game restrictions and online check-in requirements didn’t resonate with gamers, despite Microsoft Corporation (NASDAQ:MSFT)’s attempts to boldly position the changes as a way to future-proof the console by tapping into the cloud and embracing digital distribution. Following significant backlash, Microsoft was forced to completely reverse those policies in favor of a more traditional model.

The other big risk that the company took recently was none other than Windows 8, whose ambitious redesign of the core interface left consumers confused and PC unit shipments in shambles. Perhaps the biggest point of contention among Windows 8 users is the new Start Screen that replaces the familiar Start Menu. It’s this design element that Microsoft Corporation (NASDAQ:MSFT) is also now partially backing off of for the Start Screen in Windows 8.1. Instead of jumping to a new screen, Microsoft will overlay the Start Screen over the desktop as a more seamless experience.

Microsoft Corporation (NASDAQ:MSFT)’s Build developer conference kicks off tomorrow in San Francisco, and a public preview Windows 8.1 will be the main course. What else might investors see come out of Build?

Surface expansion
It’s been almost exactly one year since Microsoft hosted a secretive event to unveil its Surface tablet. Microsoft Corporation (NASDAQ:MSFT)’s foray into first-party tablet hardware is among the biggest strategic shifts in its history. Major tech players now tend to gravitate toward annual product cycles, so it’s possible that investors will hear something about the second-generation Surface models. The twist is that while Surface was unveiled last June, it wouldn’t launch until October (Surface RT) and February (Surface Pro).

There’s also been plenty of talk of new members to the Surface family, such as a Surface smartphone or Surface Book laptop. Microsoft also has yet to enter the small-sized tablet segment directly, and a smaller Surface also makes sense. All of these seem like inevitable progressions to Steve Ballmer’s vision of Microsoft Corporation (NASDAQ:MSFT) becoming a “devices-and-services” company. Previous rumors suggested that a Surface Book would sport Intel Corporation (NASDAQ:INTC)‘s Haswell processors, which are just now starting to hit the market.