Windows 8 Isn't a New Coke Moment

A number of media sites over the past day or so have compared Microsoft's failure to wow the market with its Windows 8 operating system as analogous to New Coke, the ill-fated attempt in 1985 to change the flavor of the century-old popular soft drink.

The change was so widely rejected that three months later Coca Cola Corp. reversed course and brought back the original Coke. First it branded the revived version as Classic Coke while keeping New Coke on the shelves as Coke II, which was ultimately phased out.

Whether or not you're old enough to remember the New Coke debacle, it certainly remains a case study in how not to destroy a brand. Search for "New Coke" today on Google or Bing and you'll see numerous articles and blog entries comparing Windows 8 to New Coke. However, Windows 8 is not a "New Coke moment" for Microsoft and I'll explain why.

But first, here's the latest news on Windows 8. Tami Reller, Microsoft's chief marketing officer and CFO of Windows yesterday revealed on the Microsoft's official Windows Blog that a public preview of Windows "Blue" will debut at next month's BUILD conference in San Francisco and with general releases slated by year's end.

Reller tacitly acknowledged Windows 8 hasn't met customer expectations. She also reported that slightly six months after its release, 100 million Windows 8 licenses have shipped, which includes license upgrades as well as its Surface own devices, PCs and tablets offered by third-party partners such as Acer, Asus, Dell, HP, Lenovo, Samsung, Sony and Toshiba.

In enterprises however, IDC analyst Al Gillen, told The New York Times, that 40 percent of those customers have license agreements that allow them to downgrade to Windows 7. I sent Gillen a note asking how many of those customers exercise those rights. While he didn't have hard data, he said "my sense is that it is pretty high, probably similar to or higher than Windows Vista (meaning majority of those with downgrade rights are probably exercising them). It is a classic avoidance scenario having more to do with existing momentum of Windows 7 than anything else."

A survey of more than 1,100 Redmond magazine readers planning to replace their PCs, 69 percent said they will install Windows 7, while 18 percent will use Windows 8.

That Microsoft sold 100 million Windows 8 licenses was also the range most analysts had assumed (or at least in that ballpark), though Microsoft raised eyebrows when it didn't provide an update when it reported its fiscal year third quarter earnings last month. The last update Microsoft offered was in January when it said it sold 60 million Windows 8 licenses.

Now most observers believe Windows Blue will let users configure their PCs to boot up to the classic Windows 7-like desktop rather than to the current tile-based Windows Store interface, which requires them to touch or click on the Desktop tile. Everyone is also expecting Microsoft will bring the Start menu back to the classic desktop. None of this is certain, nor did Reller tip her hand.

Microsoft will face a loud uproar if doesn't include these changes and Reller all but indicated that's not what Microsoft wants. "The Windows Blue update is also an opportunity for us to respond to the customer feedback that we've been closely listening to since the launch of Windows 8 and Windows RT," Reller said. "From a company-wide perspective, Windows Blue is part of a broader effort to advance our devices and services for Microsoft."

Also part of that effort is to have smaller devices that can answer Apple's iPad Mini, Amazon's Kindle Fire and the Google Nexus 7. The Wall Street Journal last month reported Microsoft is planning a 7-inch device, based on interviews with Asian component manufactures.

The BBC yesterday interviewed me for its daily World Business Report for a piece it did trying to compare Microsoft's moves as a "New Coke moment." When asked if I saw similarities I said no because Microsoft's not doing an about face here. Unless planets collide, Microsoft's not scrapping its tile interface. Microsoft's likely plan is to make Windows 8 more appealing to those who want the traditional interface while allowing them to use the tile interface at their leisure or as apps they need make sense.

As far as I can tell, the first to make the New Coke analogy was Steven J. Vaughan-Nichols, who last week maintained Microsoft should respond by "dumping the Metro interface."

I wouldn't bet on that happening, nor should it.

Posted by Jeffrey Schwartz on 05/08/2013 at 1:15 PM