Microsoft Sees a New Image of Itself in Windows 8 - Businessweek

In the runup to its official unveiling of Windows 8 on Oct. 26, Microsoft (MSFT) has flooded the airwaves with a catchy TV commercial for its homegrown Surface tablet. The spot features people of all walks of life performing dance moves while showing off the Surface’s attached kickstand and its clever cover that doubles as a keyboard. Early signs indicate the ad is doing more than just driving interest in Surface. It’s caused viewers “to see the company as moving in a new direction,” says Peter Daboll, chief executive officer of the ad tracking company Ace Metrix, which monitored consumer reception to the Surface commercials.

That’s the real message Microsoft wants to conveyâ€"that it’s not just rolling out another Windows upgrade but an entirely remade vision of the company. In the next week it’s going to release a new version of Windows for computers, tablets, and smartphones; the Surface tablet; a music and movie service; slick software for the Xbox; and an upgraded version of Skype (MSFT). The company is trying to coax people into a computing universe in which all its products have a similar interface and work together in sophisticated, almost magical ways.

This mission is so important to how well Microsoft competes with Apple (AAPL), Google (GOOG), and others in the future that the company has turned radically inward to pull it off. Microsoft made its fortune by forging deep ties with companies such as Hewlett-Packard (HPQ) and Dell (DELL), which make devices that run its Windows software, and Intel (INTC), which makes the chips that drive those devices. This time around it’s proven willing to burn bridges to deliver an uncluttered message to consumers.

The new universe Microsoft looks to put in front of consumers revolves around Windows 8. It’s an operating system that has touchscreen navigation baked into its DNA and that uses large, colorful, interactive tiles to start applications. Gone are the days of Windows being that useful but boring glue that makes things like printers and tax software work. Instead, you have an operating system that makes a computer feel lively and interactive as, for example, your contacts update automatically with tweets and photos from friends. It’s the difference between being the obligatory software users have to have and the enabler of a cutting-edge technology experience users crave.

Through Windows 8, Microsoft will bring the same look and feel to tablets, laptops, and desktops. Its cloud computing services will let users sign into a PC, phone, and Xbox with the same name. Now you can buy a song on a tablet while traveling, and it will be waiting on your PC at home. Want to hop from ESPN (DIS) to HBO while watching TV on your Xbox? Your Windows phone works as a remote. “You can see Microsoft coming together as a company,” says Rahul Sood, the founder of PC maker VoodooPC and a Microsoft executive who invests in promising technology companies.

Microsoft has peddled this grand computing vision for a long time and struggled mightily to make it happen. While the company championed mobile devices no one wanted, Apple became the most valuable company in the world on the back of the iPhone and iPad. Google, too, outflanked it through its Android software. This has given Steve Ballmer, Microsoft’s chief executive officer, a reputation for putting the company’s future at risk because of his inability to read consumers’ tastes and ensure the company reacts in a timely fashion.

With the stakes now so high, Ballmer ordered an about-face with the development of the Surface. Historically, the company has worked hand-in-hand with partners such as Intel, Hewlett-Packard, and Acer to bring new PCs to market for a Windows launch. This time, Microsoft had its own engineers working in secret on a tablet meant to look and perform better than devices made by other hardware makers. Ballmer, the longtime supreme ally of PC executives, has infuriated his old pals by deflecting questions about the company’s plans. Asked about Microsoft making hardware, Acer CEO JT Wang told the Financial Times, “It will create a huge negative impact for the ecosystem, and other brands may [have] a negative reaction. It is not something you are good at so please think twice.”

Other examples of Microsoft’s self-interest abound. It’s built a version of Windows called Windows RT that will run on mobile chips from Qualcomm (QCOM) and Nvidia (NVDA)â€"a stab in the back of its close ally Intel. An Intel spokesman said a scheduling conflict would prevent CEO Paul Otellini from attending the Windows 8 launch event in New York. Meanwhile, PC sellers such as HP and Dell have been left trying to explain how their tablets will compete with Microsoft’s flashier gear. And what about its best buddy on phones, Nokia (NOK), which is rolling out a line of Windows 8 models? “I believe Microsoft is working on its own phone and will bring it out in six months if Nokia’s results don’t improve,” says Charlie Kindel, a former Microsoft employee who’s now an angel investor. In public, Microsoft has never discussed making its own phone and says it’s committed to its Windows Phone 8 partners.

By cutting off and competing with its partners, Microsoft runs the risk that they will end a decades-long devotion to Windows and seek out alternatives. In the short term, the question remains whether it can use Windows 8 and its living room-to-office pitch to reawaken consumers’ interest in its products. For criticsâ€"and there are plentyâ€"the answer is all too clear: “Just having the Windows name still around captures the problems of this company,” says Paul Saffo, a longtime technology forecaster. “In their heads, they know the personal computer revolution is over and that they have to move on, but in their hearts they can’t do it. If Microsoft is around in 100 years, they will try and sell us a Windows teleporter.”

The bottom line: In its fight for relevance, Microsoft has broken with tradition by launching new products with little input from its longtime industry allies.