Next year is one of
those years that can't come soon
enough for Microsoft.
It's not that 2011 was a particularly
difficult year. The company posted
record revenue for the fiscal year that
ended June 30. And its 2-year-old PC
operating system, Windows 7, hit 500
million copies sold , further embedding
it as the most widely used operating
system in the world. But 2011 had few
big product launches at the company,
Office 365 and Internet Explorer 9
notwithstanding.
Next year will be altogether different.
Microsoft is prepping the big kahuna of
its product arsenal, Windows 8 . The
company hasn't set a date, though most
analysts expect the flagship operating
system to debut before the end of the
year, and perhaps in time for back-to-
school shopping. From that product,
much else from Redmond flows.
So here are five things to look for from
Microsoft in 2012:
1. Windows 8 tablets
Windows 8 is one of the boldest bets
Microsoft will make, radically changing
the interface on the operating system to
the company's tile-based Metro look,
first used by Windows Phone 7 last
year. The familiar desktop photo
covered with application and file icons
will be available to PC users who want
it. But Microsoft is pushing the new
touch-friendly interface to convince
consumers to buy tablet computers that
will run it.
It won't be an easy sell. Microsoft will
be coming to the tablet market more
than two years after Apple iPad
launched and quickly became a
commercial success. And this holiday
season, Amazon debuted its Kindle Fire,
which became the first non-Apple tablet
to gain a meaningful foothold. Market
analyst Forrester recently reported that
consumer interest in Windows tablets is
waning.
As the core of computing moves beyond
the PC, Microsoft needs Windows 8
tablets to succeed. It's all the more
pressing as PC growth sputters and the
tablet computer market soars.
The market muscle of Microsoft and its
partners will help propel Windows
tablets at their debut. But unless
Microsoft can convince developers to
create tablet-specific apps that users
can't live without, the devices will have
a hard time making a dent in iPad's
massive lead.
2. Xbox moves farther into live TV
Even in its earliest days, Microsoft's
video game console business was
pegged as a Trojan Horse to bring the
company's technology from the office to
the living room. But the brains behind
Xbox knew they had to make a great
gaming experience job No. 1. Now,
leading the United States in console
sales in 2011, Xbox is pushing in earnest
beyond gaming.
Microsoft just brought the first hint of
live TV to Xbox consoles with an
updated look to its Xbox Live service
earlier this month. In addition to
introducing the Metro-style look to
Xbox, it also let customers of Verizon's
Fios cable television service choose
from 26 different live TV channels--
Comedy Central, HBO, and
Nickelodeon. A handful of other
partners are offering live programming
through Xbox as well.
That's clearly just the start for
Microsoft. The company is moving
toward the goal of getting consumers to
fire up their Xbox whenever they flip on
their TVs, not just when they want to
play a game. Next year will see more
live television content come to Xbox
Live. It's a foundation that Microsoft will
build out as it readies the next version
of the Xbox console, something a
source on the Xbox team says will
happen in 2013 .
3. Windows Phone: We're No. 3
It may be a measure of the decade-long
struggle to succeed in mobile telephony
that, for Microsoft, a victory would be
grabbing the third place spot in terms
of smartphone market share for its
Windows Phone software. While the
company has wrestled to arrive at a
winning formula, rivals Apple and
Google have introduced mobile-phone
operating systems that have seized
business that Microsoft had hoped to
grab.
Microsoft rebooted its phone effort at
the end of last year, introducing a
passel of new phones from partners
running its brand new operating system,
Windows Phone 7. The slick-looking
software, refreshed in September with
an update dubbed Mango, has won
plaudits from reviewers for its
animation and app integration.
While the technology is catching up with
rivals, Windows Phone's market share
hasn't. According to market research
firm Gartner, just 1.5 percent of the
smartphones worldwide run Microsoft's
operating system. And rivals aren't
standing still. Apple's new iPhone 4S
has outsold every other mobile phone
since its debut in October. And despite
the market fragmentation of Google's
Android, with different handset
manufacturers running different versions
of the mobile operating system, it
continues to pull ahead in the
marketplace.
There's little doubt that Windows Phone
share will grow, if only because of the
marketing push Microsoft and partners,
particularly Nokia, will make, coupled
with the tiny toehold it currently has.
But it's most likely to grab customers
from Research In Motion's foundering
Blackberry business rather than
established Apple and Google
customers.
4. Patent litigation aggressor
The ground Microsoft hasn't been able
to take away from Android in the
marketplace may well be covered by
the revenue it's able to generate
through the threat of litigation. The
software giant has persuaded several
handset makers--including HTC,
Wistron, and Compal -- to pay it a vig
for each Android device they sell to
settle allegations that the mobile
operating system violates Microsoft's
patents.
The Android device makers that don't
pay? Microsoft's taking them to court.
Two high profile cases will move toward
resolution next year-- Microsoft's suit
against Barnes & Noble, whose Nook e-
reader runs Android, and a separate
suit against Motorola . (Google is in the
process of acquiring Motorola Mobility.)
The tactic has proven so successful that
in 2011, Microsoft started collecting
fees from companies that make devices
running Google's Chrome operating
system as well, including Acer and
ViewSonic. Expect Microsoft to continue
to press device makers that use its
rival's technology. Likewise, count on
those manufacturers, particularly the
smaller ones, to pay up rather than face
Microsoft in the courthouse.
5. Growing search through social
Like the mobile-phone business,
Microsoft has bounced from one
strategy to the next in a bid to be more
relevant in Internet search. It's re-
branded its search engine a few times,
added key partners, and cycled through
senior executives, and still significantly
trails market leader Google.
There's one Microsoft partnership that
could start to pay off in 2012, and it's
not the deal to handle search queries
from Yahoo . It's Microsoft's deal with
Facebook. In May, Microsoft began
including recommendations from
Facebook friends into its Bing search
engine, creating customized results by
elevating the ones that receive a "like"
from someone in the searcher's
Facebook network. So when someone is
looking for a Thai restaurant in Seattle,
for example, a spot that earned a like
from a Facebook friend will rise in that
person's particular search rankings.
Google is on to the same formula too,
creating its Google+ social network to
infuse its search results with customized
answers to Web surfer queries. But in
social networking, Facebook remains
king. Using Facebook "likes" are just
the first step. Microsoft clearly plans to
add more social signals to Bing in 2012.
And while that won't topple Google, it
does offer the opportunity to grab a
large slice of the search business by
providing more relevant results.
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