Microsoft Corporation (MSFT): Windows 8 Has Failed, Now What?

The rise of tablets and smartphones has shaken up the once dominant “Wintel” PC paradigm. In an attempt to re-establish its supremacy, Microsoft Corporation (NASDAQ:MSFT) designed Windows 8 to be a hybrid operating system, useful on a variety of platforms.

But Windows 8 adoption has been poor — consumers seem baffled by the changes. Meanwhile, Windows tablets are selling poorly, and Windows Phone remains in fourth place. Can Microsoft Corporation (NASDAQ:MSFT) turn things around, or should the company cut and run?

Windows 8 has failed

Microsoft Corporation (NASDAQ:MSFT) released Windows 8 last October. The new version of Windows was the biggest redesign of the operating system since Windows 95. Unfortunately, consumers seem baffled by the changes, and Microsoft’s hardware partners have been public in their disappointment.

It’s hard to quantify consumer dissatisfaction with Windows 8, but a quick perusal of the comments section of nearly any article dedicated to the operating system reveals widespread dissatisfaction.

“I found a wonderful fix for Windows 8,” Robert McAdams commented on one of my previous blogs. “I deleted it and downloaded Windows 7.”

Browsing user reviews of laptops on Amazon reveals much the same. The top review on this budget Toshiba laptop states clearly, “I highly recommend if a person can go with another windows [operating system] installed on your computer.” Another reviewer offers a backhanded rebuttal: “Windows 8 is not as bad as they say.”

Meanwhile, Windows 8 has failed to generate the kind of PC sales Microsoft Corporation (NASDAQ:MSFT)’s hardware partners were expecting. Acer’s president remarked that Windows 8 was “not successful” andSamsung blamed the struggles of its Ultrabooks on the “less-competitive Windows platform.”

Windows Phone is falling further behind

As Windows 8 struggles on PCs, Windows Phone 8 isn’t doing much better. According to comScore, Windows Phone represents just 3.1% of the total smartphone market in the US, behind BlackBerry, Google Inc (NASDAQ:GOOG)’s Android and Apple Inc. (NASDAQ:AAPL)’s iOS.

This data was for the quarter ending Jan. 31, and thus doesn’t take into account BlackBerry’s new lineup of BB10 devices. The Z10 and Q10, along with Samsung’s Android-powered Galaxy S4 and a likely updated iPhone, should keep Windows Phone in fourth place in 2013.

No one is buying Windows tablets

Likewise, Windows tablet adoption has been tepid, to say the least. Back on March 15,Bloomberg reported that, until that point, Microsoft Corporation (NASDAQ:MSFT) had only sold about 400,000 Surface Pros, and just over a million Surface RT tablets.