In what has been described as the biggest admission of commercial failure for a major product launch since “new Coke” was withdrawn 30 years ago, Microsoft is to overhaul Windows 8, the operating system which prompted a backlash from customers who found it impossible to navigate.
Pitched as an operating system for both desktop computers and tablets, Windows 8’s touch-screen interface confused Microsoft’s customers with its interactive “tile”-based start screen and the omission of the brand’s famous “Start” button.
Mr Ballmer, the Microsoft CEO, said he was “betting the company” on the worldwide launch of a range of Windows 8 desktops, laptops, notebooks and the company’s answer to the iPad, the new “Surface” tablet.
However, the Surface has failed to make an impression in the tablet market, and the lack of affordable touch-laptops able to use Windows 8 meant customers were left flailing with an operating system they had little idea how to use.
Despite selling 100 million licences, interest in Windows 8 has flagged and Tammy Reller, head of marketing and finance for the Windows business, announced a retreat, admitting that the software had defeated many users. “The learning curve is definitely real and we need to address it,” she said.
A new update, provisionally called Microsoft Blue, will be rolled out by the end of the year. Analysts expect it to restore the Start button. A “boot-to-desktop” option could bypass the unloved Windows 8 interface altogether. Ms Reller said: “We’ve considered a lot of different scenarios to help traditional PC users move forward as well as making usability that much better on all devices.”
Investors are beginning to ask whether the exuberant Mr Ballmer, 57, who took over as CEO from Bill Gates in 2000, is still the man to take Microsoft forward after allowing rivals to revolutionise the market with touch-based mobile computing devices. Global PC sales slumped by 14 per cent in the first quarter of 2013.
Mr Ballmer should quit now, said Joachim Kempin, a former Microsoft executive who helped to build the Windows business. “Microsoft is going into surface tablets. These tablets are OK products, but nothing really distinguishes them either,” he told the BBC.
Microsoft has alienated its manufacturing partners, Mr Kempin said, noting how Hewlett-Packard and Samsung are now producing tablets for Android, not Windows.
Investors talk of a “lost decade” at Microsoft but if they want Mr Ballmer out, it will require the support of Mr Gates, who remains the largest individual shareholder. Mr Gates hand-picked Mr Ballmer and has supported his attempts to move the company from desktop software to a cloud-based, networked future.
Under Mr Ballmer, Microsoft revenues have nearly tripled from $25.3bn (£16.6bn) in 2001 to $74.3bn in 2012. But the share price has failed to match rival Apple’s soaring stock-value.
The Windows 8 U-turn was inevitable, according to analysts. Richard Doherty, of technology research firm Envisioneering, said: “This is like New Coke, going on for seven months.”
Microsoft will make Windows 8 compatible with smaller, seven and eight inch tablets, which would allow hardware makers to compete against such popular devices as the iPad mini, Nexus 7 and Kindle Fire.
- ADAM SHERWIN
Nagging fear users will desert Microsoft for Apple
There's been a picture meme doing the rounds on the internet for a few months now, which attempts to formulate a vague pattern around the success or otherwise of Microsoft's operating systems. Windows 3.1 was deemed good, Windows 95 bad. Windows 98 was good, Windows ME wasn't.
Windows XP great, Windows Vista not so. And with Windows 7 receiving critical praise, Windows 8 was, for the overly superstitious, always going to face an uphill struggle when it was launched in October last year.
Microsoft have bullishly announced that over 100m licenses of Windows 8 have been sold – but it's evident that sales are falling month-on-month in a way that sales of Windows 7 didn't. What's to blame? What's upsetting people so? After all, Windows 8's "Metro" design principles, ported across from Windows Phones, look rather beautiful. Sadly, however, "pretty" and "functional" are not the same thing; many would sacrifice the new, tasteful typography to have their Start Menu back, or for the Microsoft "ribbon" to not take up so much of the screen, or to work out how to find the Shut Down command.
Many of these complaints, it's true, can be put down to a fear of change from the "we preferred it the way it was" brigade; the same ones who whine whenever Facebook makes spontaneous layout changes. But regardless of whether Windows 8 works more efficiently under the bonnet, the user interface is, for most people, the only thing that matters. They're unsettled by drastic alterations, and millions have downloaded utilities such as Pokki, Start8 and Classic Shell to bring back some traditional elements of Windows.
Thanks to its huge success in the 1990s, Windows is globally dominant; well over a billion people are familiar with the Start Menu and its cousins. And while there's nothing wrong with bold change per se, relearning how to use a computer can be daunting on a personal level and expensive on a corporate one.
The tweaks now being made by Microsoft to placate irate consumers seem to be predicated upon a nagging fear that if people feel like they have to learn something new, well, they might just buy a Mac.
- RHODRI MARSDEN
Best of Ballmer
Ballmer on Apple's iPhone