Free, fast Windows updates are the future — and they could hurt PC sales

Microsoft will unveil the next edition of Windows in just over five weeks, according to a widely-cited report last week.

The Sept. 30 date was reported by Tom Warren of The Verge, who said “sources familiar with Microsoft’s plans” provided the information. Warren added that Microsoft would host a press event on that day, a Tuesday, to tout the new edition.

Previously, other reports had claimed Microsoft would issue a “technical preview” of “Threshold,” the code name for the next Windows, in late September or early October. Most observers and pundits have been using “Windows 9” to label the edition, preempting Microsoft’s marketing.

It’s unclear whether the preview will be available to all Windows customers, or only to a smaller, invitation-only group of developers.

Assuming that the Sept. 30 event date is correct — and while the specific day may be up for debate, there’s no reason to doubt the general timeline — it confirms a trend since the October 2012 launch of Windows 8: Microsoft has accelerated Windows’ release, if not development, schedule.

Microsoft has already promised that the future of both Internet Explorer (IE) and Windows 8.1 will not be in major releases or upgrades. Rather than wait until it has a large number of significant new features, it will feed customers a continuous stream of smaller updates composed of those features and improvements that are ready to ship.

The same will apply to Threshold, aka Windows 9. That edition will include a one-click upgrade tool, and at least through the preview period — but most likely also after it goes final — be updated monthly via a new mechanism that lets users advance directly to the newest build without having to install any intervening, and missed, updates. The tool will also eliminate the need to essentially reinstall a new version atop the old. According to reports, that mechanism will not rely on Windows Update, which is what IE and Windows 8.1 will use to receive regular refreshes.

Those changes point to a different Windows, a different Microsoft that prizes speed of delivery over milestone releases that once drove PC sales.

Such milestones — Windows 95, Windows XP and most recently, Windows 7 — were a crucial part of the OEM (original equipment manufacturer) strategy. OEMs, once the likes of Compaq and Gateway, now Lenovo, Hewlett-Packard and Dell, relied on a new Windows to spark sales of personal computers. Much of the current OEM dissatisfaction with Microsoft, evidenced by experimentations with Chrome OS as an alternative to Windows on notebooks, stems from the failure of Windows 8 to do just that, spark sales.

Sales based on those Windows milestones were premised on big changes: Big features that played to the latest hardware, big increases in hardware requirements, big ambitions. But if Windows 9 is the last in that line, or more likely, the first after the last — which would have been Windows 8 — then OEMs are looking at a future without major upgrades to lean on.

“The overall history of Windows refreshes was a straight-forward cycle,” said Tim Bajarin, an analyst at Creative Strategies, in an interview. “Every three or four years, Microsoft did a significant bump of Windows that coincided with older-machines’ going-out-of-usable cycles. That was what tended to drive what we would call the next refresh, or better put, the next phase of PC growth.”

But with a constant dribbling of features and improvements, where’s the room to craft a major upgrade? It’s not as if the two, constant-small and irregular-big, can coexist without a substantial increase in engineering at Redmond. With a finite pool of people, Microsoft can’t craft interim updates that are significant enough to matter while at the same time holding back other features for an every-three-year Big Deal, like Windows 8.

Microsoft CEO Satya Nadella has implicitly said as much. Last month, in both a 3,100-word strategy memorandum and an email sent to employees when job cuts were announced, Nadella stressed efficiency and promised leaner teams and times. “Every team across Microsoft must find ways to simplify and move faster, more efficiently,” Nadella wrote in that long missive. “We will increase the fluidity of information and ideas by taking actions to flatten the organization and develop leaner business processes.”

Those don’t sound like words of a CEO planning an engineering hiring spree for Windows.

And in his job-cuts email, Nadella again emphasized speed. “We will … become more agile and move faster.”

Minus major upgrades, OEMs may find it even harder to sell new PCs than they’ve experienced since “Peak PC” in 2011; shipments have contracted for nine consecutive quarters by IDC’s tally, and seem destined to continue shrinking through 2014.

“As an analyst, I’m looking at the industry [trends], and I’m saying that history may not repeat itself,” said Bajarin. “I think OEMs must reexamine if this future refresh rate will work in the historical context.”

Bajarin declined to put a number to the damage he thought Microsoft’s changes to Windows would do to OEMs and PC sales, saying something specific is simply “unknowable.” “But I think that it is going to be an issue,” Bajarin said.

Bajarin also thought another factor could play a part in PC problems: The talk that Microsoft will make Threshold/Windows 9 a free upgrade for at least Windows 8 users, possibly also Windows 7 owners.

In a piece he published on Tech.pinions last week (subscription required), Bajarin argued that OEMs feared a new, free Windows “would actually encourage people to keep their present PC longer and, unless it was very old, they would not see a reason to upgrade.”

“A free upgrade could be a double-edged sword,” said Bajarin in the interview. “It could be good for Microsoft, which would be able to tell developers ‘We have 300 million PCs that will be upgraded, and we’re making the path for upgrading ridiculously easy.’ The fear I have is that a free upgrade will be perceived not as a major release, and consumers may not feel the urgency to move up.”

That could both ruin Microsoft’s message to developers that they will be able to access a much less fragmented audience — Redmond has already stumbled once, using that same argument in 2012 only to see Windows 8 fail to drive PC sales or upgrades — and put the kibosh on new PC sales.

“Windows 7 came out at a time when the industry and economy was going through tough times,” Bajarin noted. “Corporations moved to a five- or six-year replacement cycle, and some consumers did the same, [extending] their replacement cycles to three to four years, with some also in the five-year range.”

Free and frequent Windows upgrades and updates, Bajarin said, may stretch those refresh cycles even more, and throw cold water on the cautious optimism that OEMs and some industry watchers now have about PC sale declines slowing, then rebounding.

“We need to be aware of the fact that while we have had a level of growth this year, overall it’s still negative three percent,” said Bajarin. “Going into the next year, there was a hope that Windows 9 would drive a PC refresh. I’m not sure that’s going to happen.”