Remember the release of New Coke in 1985? If you do, you probably know that it was a corporate failure no other company wants to experience or be compared to. Yet that’s exactly what happened when Microsoft admitted in May of 2013 that it had overlooked key elements of design and performance in its Windows 8 operating system.

One analyst compared the company's mea culpa to the PR firefighting that Coca-Cola waged nearly 30 years ago when it rolled out a product to all sorts of hype and fanfare - only to face major backlash from consumers. Coca-Cola pulled the product a mere three months later.

As Richard Doherty of tech research outfit Envisioneering, pointed out, the telling difference here is that Microsoft’s version of New Coke, in this case Windows 8, had been out for seven months before the software behemoth even acknowledged any of its issues.

Normally, such a comparison would dissolve pretty quickly into the water cooler or disappear in the news cycle but it came at a time when Microsoft was losing browser market share to Firefox and Google Chrome, losing advertising eyeballs to Facebook and Google, and remained considerably behind in the mobile technology and tablet segments.

To add insult to injury, PC sales were, by mid-2013, at a historic low. In the first quarter of 2013, the PC industry hit a bottom not seen since 1994 when the research outfit IDC first started collecting sales data. That's a low from which researchers and forecasters alike don't think the PC industry will ever fully recover.

Further, it’s less than thrilling, especially to Microsoft executives, that the software giant’s flagship product name came up in IDC’s report.

"PC industry efforts to offer touch capabilities and ultra-slim systems have been hampered by traditional barriers of price and component supply, as well as a weak reception for Windows 8," the report stated. (Get some background on what Windows 8 has to offer in 10 Things To Know About Windows 8.)

A Trinity of Enemies

In an increasingly BYOD and consumerization-driven tech world, Microsoft is getting hit from three sides by Google, Apple Inc. and Facebook. While Microsoft isn’t in any immediate danger of being supplanted, acquired or pushed off the map by these three concerns one thing's for sure: the techies in Redmond are way behind in the cool-point standings.

The biggest knock on Windows 8 is that it tried to create a pretty box with nothing in it. Or, to be more specific, Windows 8's hallmark screen tiles bely a touch-based user interface for millions of PCs and even tablets that don’t have touch capability.

Researcher Jakob Nielsen says that with Windows 8, "Microsoft has gone soft and now smothers usability with big colorful tiles while hiding needed features."

The sense here is that Microsoft was trying to create the cool factor of a lively interface. In the process, it failed to achieve the functionality of its rivals such as Google and Apple.

"Name an application from the Windows store for Windows 8 that you can’t live without ... I’ll wait," jokes Michael Cherry, a research analyst covering operating systems for independent think-tank Directions on Microsoft.

"My biggest concern frankly is that there are no compelling applications on the Metro side. Coolness and a lack of apps has been Microsoft’s Achilles' heel."

Apple will continue to be Apple with its cash position and periodic iPhone and iPad releases, which, let's face it, far surpass any hardware offerings that Microsoft had as of 2013. And the jury is still out on whether Google can manage a successful integration of its browser-based Chrome operating system and Chromebook hardware with its Android mobile OS architecture. If they do - and it seems likely that they will - Microsoft stands to suffer on that front as well.

Further, Microsoft had only moderate success with the 2013 release of its Surface tablet, leaving it with a 1.8% share in the tablet market, far behind industry leaders such as Apple, Amazon and Samsung.

S.O.S. for the Windows OS

Microsoft's biggest impediment remains its largest strength, an efficient but very boring and steady foothold in the enterprise space with legacy applications such as Microsoft Office and older iterations of its Windows operating system.

But that’s just it. The impediment going forward is that Windows remains Microsoft’s cash cow and the most popular OS releases - Windows 95 and Windows XP - are things of the past.
Plus, in the past, Microsoft could rely on underlying changes to hardware and applications to drive OS development and thus sales growth. Not anymore; in recent years the only significant hardware changes have come in the form of processing power at the chip level and enhanced server capability on the server side, which a normal computing user wouldn’t care about unless the server was down.

Maybe this is why as far back as 2010, former Microsoft employees such as blogger Hans Hoffman and Microsoft executive-cum-VMware CEO Paul Maritz started predicting the demise of Windows.
These predictions were later proved to be exaggerated but both Hoffman and Maritz point out that the client-server environment prevalent with most users working with desktops has evolved to a point where the underlying OS doesn’t matter all that much anymore.

"The computing model for the operating system has not changed a whole lot in 30 years but today that transition is happening off the PC operating system," Hoffman said.

The current trajectory of computing, many would assume, would lead to Microsoft’s loss of relevance in the arena of technological innovation.

Can 8.1 Up the Ante?

But not long after Microsoft announced it would release Windows 8.1 to address controversy, Michael Cherry of Directions on Microsoft, the research think-tank, said such assertions were premature.

"It’s a little harsh and kind of unfair to put the PC market on the back of Windows 8," he said. "But what’s incumbent upon Microsoft is that the coming features and improvements on this OS have to be rock solid to the point where it’s compelling for people who have to go through the burden of upgrading."

To ease that burden, Cherry and some of his peers in the research community have suggested that the software giant might opt to deploy an annual update of its operating systems and scale down any big releases.

This would be done to avoid false starts and unwanted feedback and also make it easier to plan for support, according to Cherry, who added that if he had his druthers he’d like to see developers getting enthusiastic about writing apps for the Windows 8 Platform.

"(Microsoft’s) biggest challenge going forward is convincing people to write apps for their platforms," Cherry said."It’s about the apps at the end of the day. I have an iPad, and you know what? I didn’t miss having a Windows OS." (For more on why apps matter, see What Is Application Software?)

What’s more is that Cherry admits that if he didn’t need a Surface tablet to do his job he wouldn’t buy one on his own. That's a pretty harsh assessment from a former Microsoft employee who still makes his living following developments in Redmond.

Windows 8.1 is scheduled for release in late 2013, and it's clear that Microsoft needs to build applications for a continuum of devices in the new more malleable cloud and mobile computing space. Oh, and they also need to do it in a compelling, and even cool, way.

Users and enthusiasts hope that it'll start with better touch-screen functionality for tablets and PC functionality for PCs, a move that would help Microsoft distance itself from the "New Coke," comparison, at least in theory.

In the meantime, a look through these Windows shows the future is cloudy. That may be as true for the company itself as it is for the operating system.