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Microsoft want to get a share of the smart phone OS business but they also have this hard-on for making everything follow the design philosophies of Windows (Courier was a casualty of this). Seeing as how they can't scale Windows down instead they'll scale up what is, in essence, Windows Phone.
Rather than starting with a phone and then scaling up to a tablet in the evolutionary step that Apple took, Microsoft is trying to do everything at once and hit phones, tablets and desktops all in one fell swoop. Its a brave and revolutionary move, to have an OS split over so many different device types and hardware designs, not to mention processor architectures, is a monumental feat to accomplish - let alone seemingly bet the company on.
Why? Their biggest competitor is Windows7. They have already announced its going to be supported for plenty more years!
I think windows 8 is going to be of little interest to a lot of office / home users who want to upgrade exisiting equipment. So what, if I wanted to shell out for a new OS every year I'd buy a mac.
The only things windows 8 has on its feature list I could see been any use to me is improved package management with the app store, thou how that plays with WUS I don't know, and faster boot times. Not enough for the effort of a re-install!
However it does work EXTREMELY well on my tablet for a beta os.
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I didn't say it was wise to implement change on such a scale.
Microsoft are, optimistically, 5 years behind Apple and if they keep acting like the monolithic corporation they seem to want to be they will get further and further away.
Microsoft are in a difficult position with Windows. They are mostly a software company so they rely on partners to implement the hardware solutions so there's a lot of juggling going on as Microsoft try to keep everyone happy whilst still trying to exert as much control as possible. This utter reliance on other companies means that, ultimately, Microsoft does not control its own destiny when it comes to their OS. PC sales are also declining, with people realizing that a mobile device can serve as a cost effective replacement, or even just a more convenient addition, when it comes to light computing tasks. While the Windows PC isn't dead, it's definitely not in the best of health and as more and more of its tasks are taken over by dedicated machines it could become an endangered breed.
The embracing of the ARM architecture is a necessary step for Microsoft. While it will almost certainly limit initial sales to devices targeting Apple's price-range, it at least gives it the option to produce variants for the bottom end of the market in the future if need be. Net-tops initially sold well because of the price-point, if Microsoft will allow partners to produce entry-level tablets for around the same price then this could encourage sales right the way along the chain. ARM-based servers are also a possibility, the equivalent of a high-end NAS being able to run a full version of Windows gives Microsoft access to a much wider spread of hardware and allow them to supply software solutions across the board.
Their main competitors on the mobile front, Apple and Android, sit at almost opposite ends of the spectrum. Apple maintain full control of their eco-system, not only do they have full control over both hardware and software but they also take a cut of any software sales for their devices. Google is closer to Microsoft, in that it currently relies on partners for the hardware (although this may change with the purchase of Motorola but probably not to the degree of Apple). Google also make money through the use of Android, but not always directly like Apple does.
Microsoft are trying to maintain a balanced approach, currently relying on partners for the hardware like Google but also trying to maintain the same user experience across all devices the way Apple does. You get the feeling that they're trying to play both sides of the coin but also, with Nokia, have a backup plan should they want to bring the hardware in-house (it's not just me that thinks that Elop is a plant, right ?)
tl;dr MS needs to make sure it has a coherent plan for all aspects of Windows.
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