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Why Windows 8 Made Me Sell MSFT
Institutional Investor ^ | 07/19/2012 | Vitaliy Katsenelson

Posted on 07/19/2012 3:36:24 PM PDT by SeekAndFind

I sang love serenades to Microsoft in the December issue, but a few weeks ago we sold our shares of Microsoft. Because we believe the stock is undervalued, that decision was not easy. What changed? A very important part of my thesis was the success of Windows 8, an operating system that Microsoft made for both PCs and tablets. When I saw Windows 8 demonstrated in early 2011, it looked like a very innovative, un-Microsoft-like product. Windows 8 was very important for Microsoft's response to Apple's iPad --- a tablet that was deservingly stealing market share from low-end laptops. Windows 8 was supposed to take Microsoft to the next level, leapfrogging Apple and Google.

A few months ago Microsoft released the public Windows 8 beta, and I tested it out. To my shock, I found it to be a very confusing product. The interface was slick and visually very appealing, but I simply could not figure out how to use it. All the experience I had accumulated using Windows over the past two decades was useless with Windows 8, and the fact that Microsoft took out the Start button did not help, either. I found myself staring at the screen helplessly, clicking the mouse on different corners, trying to discover how to do basic tasks that we normally take for granted, like starting a program or running two programs side by side. Even figuring out how to shut down the computer was an ordeal.

After a while our frustration built up to the point where I wanted to curse and scream obscenities at Microsoft and its CEO. I decided, however, to wait. Windows 8 had just been released for consumer preview; it was in beta, not a final product. I thought Microsoft could not possibly release a product that was so important to its future but so obviously confusing. To be honest, I simply could not process the situation; I thought maybe it was me; maybe I’m lacking the Windows 8 gene in our DNA. However, in May I read several professional reviews that confirmed our worst fears: the Windows 8 I had used was the product Microsoft would ship (less a few bugs). And I was not the only one with that deficient Windows 8 gene. As John Dvorak of MarketWatch put it, “The real problem is that it is both unusable and annoying. It makes your teeth itch as you keep asking, “Why are they doing this!?”

I know why. Microsoft wanted the same version of Windows to work on both a PC that is controlled with a mouse and a tablet controlled by touch. Microsoft had learned from past mistakes and had stopped trying blindly to port Windows made for PCs to tablets and mobile phones. Instead, it took the Metro interface it created for mobile phones and ported it to tablets and PCs. Though this strategy should work for tablets — after all, tablets are just supersized mobile phones — it fails miserably when you port it to PCs. But that is what Microsoft did. The touch gestures that work well and are intuitive on tablets and mobile phones fall flat when you try them on a PC with a mouse — swiping, a very natural touch gesture, is simply cumbersome with a mouse.

Microsoft’s ambition was to make tablets running Windows 8 as powerful as your average Windows PC. Tablets, to date, have been great at receiving information (reading, watching movies) but weak at creating content. When I travel I still have to bring along a laptop and a tablet. Microsoft wanted to make a tablet that was good at both receiving and creating content. This could have given Microsoft a significant leg up on the iPad, which is terrific for consuming information but still limited when it comes to productivity. I don’t have a view on how good Windows 8 is for tablets, but I think that Windows 8 for PCs turns PCs into productivity-reducing tools; and I think this unfortunate OS is going to be bad for MSFT.


TOPICS: Business/Economy; Computers/Internet
KEYWORDS: microsoft; windows8
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To: UB355

Selling an UNDERVALUED stock! Sounds like something an 0bama economic advisor would do!


21 posted on 07/19/2012 5:25:16 PM PDT by reg45 (Barack 0bama: Implementing class warfare by having no class!)
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To: Constitutionalist Conservative

One curious aspect of Server 2012 is the reliance on Powershell v3 versus GUIs for management. I see a similar trend in W8. They say you “Have to” know powershell v3 to effectively manage Server 2012 machines in an enterprise. Same with Exchange 2010. Not good.

MS went from the command line to GUI now back to the command line.

I expect Windows 9 to be a $500 book of Unix commands with the Preface titled: “How to Build This OS Yourself You Lazy MF-ers!”


22 posted on 07/19/2012 5:32:26 PM PDT by Justa
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To: Ron C.
I think it is the most used in the world at this point.

Not really:

The graph is for world wide desktop, laptop and tablet systems.

As far as only Americans using Windows, Microsoft's biggest markets today are overseas.

23 posted on 07/19/2012 5:33:56 PM PDT by Alas Babylon!
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To: SeekAndFind

http://news.yahoo.com/microsoft-reports-first-loss-public-company-200908715—finance.html?_esi=1

Microsoft reports first loss as public company

LOS ANGELES (AP) — Microsoft has posted its first quarterly loss in its 26 years as a public company as it declared a struggling online ad business a bust and prepared for one of the biggest product updates in its history.

The software company had warned two weeks ago that it would take a $6.2 billion charge in the April-June quarter because its 2007 purchase of online ad service aQuantive failed to help it compete with Google Inc. The amount reflected the bulk of the $6.3 billion it paid for aQuantive.

The purchase of aQuantive, Microsoft’s most expensive deal at the time, was supposed to help Microsoft boost its online ad business and mount a more serious challenge to Google. But the division housing aQuantive continued to post losses — totaling more than $9 billion since the company bought aQuantive, not including the charge.

By contrast, Google has widened its lead in the growing online ad market, thanks in part to its purchase of DoubleClick for $3.2 billion about eight months after Microsoft took control of aQuantive.

Google’s search engine, a major vehicle for selling ads, has remained strong, while Microsoft’s Bing search engine saw its market share drop slightly to 26 percent, from 27 percent a year ago. The Bing figures include searches through business partner Yahoo Inc., which has been using Microsoft’s search technology for nearly two years.

The aQuantive setback didn’t faze investors, who have been used to years of troubles in Microsoft’s online ad business. Investors usually focus on what lies ahead for a company instead of dwelling on past mistakes. Despite the loss, Microsoft’s stock was up 72 cents, or 2.4 percent, at $31.39 in after-hours trading following the announcement.

Microsoft’s fortunes are now tied to the Oct. 26 release of Windows 8, the most extreme redesign of the company’s flagship operating system since 1995. Windows 8 will feature a new look and boast new technology that will enable the operating system to work on touch-controlled tablet computers, as well as Microsoft’s traditional stronghold of desktop and laptop computers. In conjunction with Windows 8, Microsoft is planning to release its own tablet, the Surface.

A revamped version of another lucrative franchise, Microsoft’s Office software that bundles word processing, spreadsheet and email programs, is also in the works. Earlier this week, Microsoft previewed how the next version of Office will work on tablet computers running on Windows 8.

Microsoft, which is based in Redmond, Wash., has never previously reported a quarterly loss since the company went public in March 1986.

The $6.2 billion charge is a non-cash adjustment, which companies do when the value of their assets decline. Companies have to review their assets once a year, and the just-ended quarter is Microsoft’s final one for fiscal 2012.

With the charge, Microsoft had a $492 million loss in the fiscal fourth quarter, or 6 cents a share. That compares with earnings of $5.9 billion, or 69 cents, a year ago.

Revenue rose 4 percent to $18.06 billion.

Excluding the adjustment and the deferral of some revenue related to Windows 8, earnings came to 73 cents per share, beating the 62 cents per share expected by analysts polled by FactSet.

Although the earnings were higher than expected, analysts were looking for higher revenue at $18.15 billion.

With Windows 8-powered devices still a few months away, some prospective PC buyers have been postponing their purchases so they can buy the latest technology from Microsoft this fall. Microsoft said PC sales were flat in the just-ended quarter, and revenue in Microsoft’s Windows division has now dropped in five of the past seven quarters.

The pressure won’t be on Microsoft until Windows 8 is released in three months. Investors will then be closely watching to see if the new operating system delivers on its goal of making Microsoft a significant player in a tablet computer market dominated by Apple’s iPad, while also helping boost PC sales.

The high hopes for Windows 8 are the main reason Microsoft’s stock has climbed about 18 percent this year as of Thursday’s closing price of $30.67.


24 posted on 07/19/2012 5:43:35 PM PDT by Chode (American Hedonist - *DTOM* -ww- NO Pity for the LAZY)
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To: MS from the OC

he didn’t read that MS bought a software company for billions that has a “better” interface for touch screens...some real insider - not.


25 posted on 07/19/2012 6:08:28 PM PDT by q_an_a (the more laws the less justice)
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To: Alas Babylon!

“Not really”.

He may have been thinking of world wide installation of web servers, in which case linux/unix do have the vast number of installs.


26 posted on 07/19/2012 6:30:40 PM PDT by tickedoffnow (No more...)
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To: SeekAndFind
Ubuntu went the same direction an year or two ago with their "Unity" interface. I had been a long time fan of Ubuntu. Tried to make Unity work for me for an entire release cycle.

I still run Linux, but a KDE based distro now. I think Microsoft is about to learn the same lesson Ubuntu is learning - if you try to please everyone, no-one will like it.

27 posted on 07/19/2012 6:57:25 PM PDT by ThunderSleeps (Stop obama now! Stop the hussein - insane agenda!)
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To: tickedoffnow

Yes, the numbers for web servese are about 60+% Unix variants, and 36% or so Windows.

However, the article is about Windows 8, which is a client system.

I’m teaching a Linux Fundamentals class next week, and I love it. Been installing Fedora 17 all day...


28 posted on 07/19/2012 7:02:20 PM PDT by Alas Babylon!
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To: tickedoffnow

Yes, the numbers for web servers are about 60+% Unix variants, and 36% or so Windows.

However, the article is about Windows 8, which is a client system.

I’m teaching a Linux Fundamentals class next week, and I love it. Been installing Fedora 17 all day...


29 posted on 07/19/2012 7:02:57 PM PDT by Alas Babylon!
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To: PastorBooks

Uh, I’ve got two degrees in computer science, 40 years experience in computing and networking, and 15 years experience with PCs and Windows, and I wasn’t too much better off than that guy’s dad. Within 30 minutes of installing W8, I literally wanted to scream and throw heavy objects at my computer. Trying to use W8 CP wasn’t an academic exercise for me either. I needed to port a large amount of code to it as well as be prepared to support my customers in the future.

I finally just gave up. But I did come back a few weeks later and installed Classic Shell to restore the Start Menu, as well as inventing novel hacks to the registry that no one else had done in order to automatically skip Metro UI to go right to the real desktop on W8 Consumer Preview. (The hacks were difficult because the methods used to skip Metro UI on Developer Preview had been deliberately disabled by Microsoft.)

I predict W8 will be a bigger disaster for MS than Windows 95/98/Me and Vista combined. I can’t wait to see the new Apple ads impugning Metro UI: “If you think Vista was bad, have you tried Metro UI yet?” All they’d have to do is film a bunch of folks using Metro UI the first time and then extract a montage. It would be funnier than a barrel of monkeys and quite instructive too.

I will be buying some LEAP PUTS on MS and on PC ETFs if MS does indeed release W8 as it stands now.


30 posted on 07/19/2012 7:22:41 PM PDT by catnipman (Cat Nipman: Vote Republican in 2012 and only be called racist one more time!)
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To: Ron C.
I'm with the author - MS 8 is a piece of crap.

I have Win8 installed in a VM. It's a complete disaster. For example:

MS is going to sell upgrades from Vista for $35. This is the cheapest MS upgrade ever. However there are some serious limitations on the hardware, so probably nobody will buy the upgrades. Usability-wise, Win8 cannot be used by anyone, period. The only exception is people who have very basic computer needs - such as all they want is to run a browser. But those people will not buy a desktop anyway.

Windows 7 is the best OS that MS produced so far. If you don't care about the latest technologies then WinXP will work for you. Win8 ... stay away. Those guys are right to sell the MS stock. It's not just the fact that Win8 will be a total loss. The worst is the fact that MS is operated by a bunch of narcissistic idiots who think that they can change the way the world works (on PCs.) A company like that is in much bigger trouble than just a failure of one product.

P.S. Their lack of wisdom does not limit itself to Windows OS. MS already hurried up and produced MS Visual Studio 2012 RC that I also have. The developers were so stupid that they picked a color scheme where you can't tell elements apart. It looks ugly as sin, and it is hard on the eyes. Those guys simply lost their mind (assuming that they had it at some point.)

31 posted on 07/19/2012 8:50:40 PM PDT by Greysard
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To: Alas Babylon!
"The graph is for world wide desktop, laptop and tablet systems"

Wow! Thanks for that info. A lot has changed in past years. For a while 'back when' Linux was quite large in Europe and much of the 'East' while very few used used MS Windows - particularly their college kids.

Also particularly interesting to me is the inclusion of iPad, iPhone and Android as OS - since I don't think of these things as 'computers' in their own right - but they can get on the internet, so perhaps that's the reason they are included.

However, I think the graph misses the huge number of linux machines that act as servers on the net, both here in the US and more so in Europe.

32 posted on 07/19/2012 8:56:29 PM PDT by Ron C.
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To: Greysard
GAD!! LOL - that is the most scathing critique of an MS OS I believe I've ever read!

'Nuff said - I'll by 7 rather than try to survive on XP after they quit supporting it (soon, I read somewhere.)

33 posted on 07/19/2012 9:02:44 PM PDT by Ron C.
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To: Greysard

That should have been, ‘I’ll buy 7’ - too fast on post without re-read. ~grin~


34 posted on 07/19/2012 9:08:32 PM PDT by Ron C.
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To: Constitutionalist Conservative

It will fail miserably.

What the Hell were they thinking??

OSX’s headed the same way.It’s frustrating.

Those of us who use PC’s for our profession are being downgraded, I’m afraid.

Ed


35 posted on 07/19/2012 9:11:15 PM PDT by Sir_Ed
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To: Alas Babylon!

“I’m teaching a Linux Fundamentals class next week, and I love it.”

Sounds fun! Where are you teaching it, at a community center? A church? School?

PS. I just checked your Freeper page... Thank you for your service to our country!

Knowing your background, I’ll take your recommendation to read “Alas, Babylon” seriously — given the stuff you must know about...


36 posted on 07/20/2012 1:23:32 AM PDT by PastorBooks
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To: catnipman

When someone as yourself (who can do registry hacks!) is frustrated using Windows 8, then this thing is a Titanic in the making.

Question is: will the iceberg take down the ship?


37 posted on 07/20/2012 1:36:34 AM PDT by PastorBooks
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To: PastorBooks

I teach at a university... Usually, Microsoft type courses on servers, services, and clients, so Linux is a fun break for me-—I am a Linux fanboy!


38 posted on 07/20/2012 5:59:16 AM PDT by Alas Babylon!
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To: Alas Babylon!

“I’m teaching a Linux Fundamentals class next week, and I love it.”

Programmer going on 14 years now. I spend 10 hours a day on our RHE servers (ok, a few debian and fedora builds..).


39 posted on 07/20/2012 4:47:10 PM PDT by tickedoffnow (No more...)
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