Based on a registry key found in Windows 8 Consumer Preview, there are potentially nine different editions coming later this year: Windows 8 Starter; Home Basic; Home Premium; Professional; Professional Plus; Enterprise; Enterprise Eval; Ultimate; and ARM. The six Windows 7 editions already are too many. Nine is bad gone way worse and shows that Windows 8, for all the courageous changes, is too much about the past way of thinking. Microsoft is looking back at the old PC model rather than looking far enough ahead to the cloud-connected device era.
Apple's approach of offering one desktop OS for consumers, small businesses or enterprises is better. But Apple exists in a competitive market. Microsoft generally competes against itself in PC operating systems. The Redmond, Wash.-based company has a monopoly on x86 processors, as determined by European and US courts. Differentiation typically drives competition, hence the number of toothpaste varieties. But Windows isn't toothpaste, because one product essentially owns the market. You't can sell Windows the same way as toothpaste, by trying to artificially create differentiation where it doesn't organically exist.
But that's the approach Microsoft has tried since Windows Vista and it's an abysmal failure everywhere but one new edition: Enterprise. Businesses only can get this OS by signing up for or already participating in annuity licensing contracts with Software Assurance -- for which they pay more upfront. Microsoft imposes this requirement. There is nothing about Enterprise edition that requires it.
In February 2006, when working as an analyst for Jupiter Research I blogged "the version strategy may also allow Microsoft to do something not done in more than a decade: Raise desktop operating system prices, a tact that can be difficult to take in a market where one product dominates and where monopoly and a contentious antitrust case cast long shadows". That's exactly what happened by introducing Ultimate and strong-arm licensing tactics for Enterprise.
Microsoft wouldn't need to artificially differentiate Windows if there was competition. Monopoly creates three problems for the software giant:
- Limited product choice -- because there isn't organic competition.
- Self-competition -- where older versions of the monopoly product compete with newer ones.
- Sales stagnation -- selling essentially the same product to the same customers over and over.
Before someone jumps to comments and argues against sales stagnation, consider this: Ten-and-a-half years after its release -- and Windows Vista and 7 in between -- XP is still the most widely used version. Sure, Microsoft sold over 500 million Windows 7 licenses, but the majority went to customers using XP and not Vista.
Keep It Simple, Stupid
There are many reasons for this situation, but one is often overlooked. There are two Windows XP versions: Home and Professional. Microsoft added another four with Vista, kept a high number with 7 and looks to be preparing to up the number with the next version. The number of editions creates customer confusion and unnecessary barrier to adoption.
Perhaps matters would be different if there was more natural competition or if Microsoft based Windows editions on something meaningful. But in looking at how Microsoft has divvied up features, they're arbitrarily done. This approach is more sensible in consumer markets where there is competition and differentiation a necessary byproduct.
The versioning strategy works better with Office, another monopoly product, because customers typically buy the software separately. Three-quarters of Windows sales are through PC OEMs. The artificial differentiation forces -- or worse, fails to -- computer manufacturers to make hardware choices based on the operating system. There's a mishmash of hardware and software capabilities, all so Microsoft can offer multiple Windows editions.
Three Office editions are available at retail: Home and Student, Home and Business and Professional. Two others are volume-license only. Microsoft sells three of the Windows 7 editions at retail, which is tacit admission six is too many. Basic and Starter come on new computers and Enterprise is license only. Conceptually, Windows 8 Professional Plus would make another available through retail.
One is Enough
In late 2005, when meeting with Microsoft executives and later blogging about the version strategy, I strongly recommended there be one Windows edition. The idea: Microsoft would externally release a single Windows version and, at most, keep internal versions for licensing purposes. After all, most customers buy Windows on new PCs anyway.
OEMs would license Windows based on capabilities, and for them, different versions could make sense. Customers would make purchasing decisions around price and PC capabilities rather than trying to decide if a laptop with Ultimate is comparable to a similarly priced computer with Home Premium.
The single-version approach isn't so radical. Apple does it, as Microsoft once did. Windows 95 came in one version, for consumers and businesses, and the OS was a huge sales success. Certainly, the single-version approach isn't the only reason. Nevertheless, simplicity made marketing Windows 95 easier and is more important now than 17 years ago. In 1995, Windows competed against products like Mac OS, OS/2 and DR DOS. Today, Android, iOS and OS X renews competition and, for the mobile operating systems, in markets where Microsoft has no monopoly position.
Two is Better
But one isn't the best approach anymore. Two is better: Windows 8 on Intel processors providing backward compatibility to older applications and bridge to the future with Metro UI and native coding around WinRT; Windows on ARM for mobile PCs, tablets and newer device categories.
Microsoft might still get this versioning thing right, if there is only one Windows on ARM edition, which conceptually is possible since the operating system will only be available on new hardware. Microsoft plans no separate software sales. There Microsoft could offer a single license to all OEMs or make them pay based on capabilities they implement in the hardware. But to the buyer, there is one version and choice about capabilities offered by hardware and software together.
Windows on ARM is the future of Microsoft's flagship operating system. There Microsoft faces lots of competition, looking at Android and iOS lead on media tablets and smartphones. Simplicity is key to effective marketing. Metro introduces change enough, without Microsoft overcomplicating Windows on ARM -- or Windows 8, for that matter. Simplicity sells, complexity smells, and this is truer in marketing than almost anything else.
Apple's approach is better and undermines the sales value of Windows. With Snow Leopard, Apple lowered the desktop price to $29.99, or $49.99 for a Family Pack. Current version Lion costs less -- $29.99, which covers upgrades for multiple PCs in a household. So my cost for three Macs in our home was effectively $9.99 a piece. Windows 7 Home Premium retail upgrade from Amazon: $106.29 per license.
And Microsoft wants to increase the number of confusing Windows editions and attempt to create arbitrary value around them? I sure hope not.