2023 author’s note: Over at Fast Company, you can read my new cover story on Satya Nadella and Microsoft—and more specifically, the company’s decades-long investment in AI, which is finally starting to pay off in a big way. As I worked on it over the past few months, it dislodged a minor factoid from the back of my brain: Eleven years ago, I wrote a magazine article about Microsoft that was never published.
One of my favorite things about working for TIME magazine, as I did back then, was the editorial acrobatics involved in putting out a newsweekly. When the timing worked in our favor, I could be finishing a story on Wednesday afternoon and hold the printed issue that contained it two days later. But when news broke late in our weekly cycle, it often bumped a story right out of the magazine—sometimes just for a week, and sometimes forever.
Which is why, when I think about Elizabeth Taylor passing away in 2011, what I remember is that it happened on a Wednesday, just in time to make it into that week’s issue. As we made room for a tribute, a short article I’d written about the alleged new trend of people spurning Facebook got cut. The noxious magazine-industry tradition of the kill fee came into play—I was a freelancer at the time—and TIME reduced my fee by half, even though the quality of my work had nothing to do with it being axed.
The following year, after I went on staff, one of the big stories in tech was the rest of the industry’s reaction to Apple’s success with the iPad. For a time, it seemed possible that PCs as we knew them might largely give way to tablets. Microsoft responded with Windows 8, a radically reimagined version of its operating system designed with touch in mind. Concerned that the hardware makers who licensed Windows might not handle this epoch-shifting transition adroitly enough, it also developed its own line of tablets, known as Surface.
It was a big, big deal: The company whose software ran on nearly every non-Apple PC was finally making computers itself, taking full responsibility for what Steve Jobs called “the whole widget.”
I can’t remember if I pitched the idea or it originated back in NYC within the Time & Life Building, but in October, as Windows 8 and the first Surface were about to ship, I wrote a 2,000-word story about them. For some reason I either didn’t know about or don’t recall, my piece didn’t make it into the designated issue. When I asked if it still stood a chance of reaching print, my editor replied with a noncommital “we’ll see,” then never mentioned the subject again. By the time it was clear it didn’t, the news felt a tad stale, and so we didn’t run it online, either.
So here it is, for the first time ever. As with the 2013 Evernote story I recently posted, this is my unedited draft. Since I hadn’t read it myself since filing it, I’d forgotten some details, such as the fact I interviewed Tandy Trower, the Microsoft product manager who’d shipped Windows 1.0 back in 1985. I don’t think anyone else likely to write about Windows for TIME would have thought to do that. This might also be the first time I spoke with Panos Panay, who is now Microsoft’s chief product officer and one of the people I interviewed for my new Fast Company story. And while many PC makers didn’t want to talk about Surface, I did get a decent quote from Toshiba, which later abandoned the PC market altogether.
My piece not making it into TIME wasn’t a tragedy, but if nothing else, it’s a snapshot of a particular moment. As you probably remember if you’ve read this far, the iPad didn’t kill conventional PCs after all. Once Windows users made clear that they weren’t all that eager to enter a brave new world, Microsoft unwound some of Windows 8’s most extreme departures from earlier versions. Surface did seem to scare third-party hardware manufacturers into making more polished, ambitious Windows computers, which was part of the idea all along. And eleven years later, Microsoft still finds being in the hardware business to be worth its time: It’s expected to announce new Surface models next month.
Anyhow, here you go—and if you read to the end, I promise to share some bonus material.
[HED] Microsoft Reboots Windows
[DEK] The software giant’s plan to transform its 27-year-old cash cow for the iPad age is bold — and risky.
By Harry McCracken
In December of 1974, a college dropout and proto-computer geek named Paul Allen picked up the new issue of Popular Electronics at Harvard Square’s Out of Town News. It cover-featured the MITS Altair 8800, a $397 build-it-yourself microcomputer. Allen and his equally nerdish buddy, Harvard sophomore Bill Gates, were instantly transfixed by the machine, and wondered: Could they make money writing software for it?
They could. They did. And the company they founded, initially known as “Micro-Soft,” has made money selling software to computer manufacturers ever since. Today, research firm Gartner says that well over 90 percent of the nearly 1.7 billion PCs in use worldwide run Windows, each having contributed to Microsoft’s epically prosperous bottom line.
It’s one of the most potent business models in the history of business. But starting on October 26, Microsoft is giving it a good, hard shake. That’s the day that the company is releasing Windows 8, a touch-friendly, radically-streamlined update that’s the most fundamental reimagining of Windows since…well, ever.
Just as striking, it’s doing something it abstained from for its first thirty-seven years: designing and selling its own computers. Its new Surface is a line of Windows tablets which compete not only with the iPad and Android tablets but also with Windows computers from Microsoft’s own hardware-making customers.
Why so much change all at once? Microsoft and the entire PC industry would like to give consumers sexy new systems to buy this holiday season, of course, but that’s just for openers. “We see Windows 8 as the beginning,” says Jensen Harris, the company’s director of product management for the Windows User Experience. “The launchpad for an entire decade or more of innovation.”
This age won’t look much like the one which Microsoft and Windows ruled for so long. For one thing, the market for traditional PCs is maxing out. Sales have been sluggish-to-declining in 2012, and nobody predicts torrid growth in 2013 and beyond.
Another gadget category is booming the way PCs once did: tablets. But Microsoft — which first started trying to spur adoption of Windows tablets two decades ago — is an also-ran. Instead, Apple owns the market, even though it puts its own software on its own iPad hardware rather than licensing it to the rest of the industry. By following this approach with the iPad, iPhone and Mac, Apple doesn’t just make the industry’s slickest, best-integrated devices. It also makes more profit than Microsoft, an outcome which would have been unimaginable even years after Steve Jobs turned around the company he co-founded.
Throw in the competition provided by other contenders such as Google with its Android software, and for Microsoft, “the stakes have never been higher,” says Gartner Research Director Michael Gartenberg. “This is the first time ever that the Windows franchise has been challenged. The PC is just one more device among many.”
It’s easy to see Windows 8 as a product that’s been rejiggered for the post-PC era which Jobs declared was upon us when he unveiled the first iPad in 2010. But Harris says that Microsoft was already at work on a major makeover. “During the summer of 2009, we looked at the history of Windows and realized that the last time we had made a major change to the user interface was in 1993, with Windows 95,” he explains. “We thought of all the ways the world was so different then. It was a pre-Internet time, a time before MP3s, a time when PCs were beige boxes that sat under a desk.”
The first time you fire up a Windows 8 computer, you land in something which doesn’t resemble today’s Windows 7, let alone Windows 95. If you’re tempted to get your bearings by hunting down Windows’ most iconic feature, the Start button, don’t bother. Microsoft eliminated it, a decision which underlines the fact that you’re not in Kansas anymore.
Instead, you get the Start screen — a colorful, panoramic wall of oversized tiles, some of them auto-shuffling through notifications or photos and all of them leading to applications and services. The only existing software it closely resembles is Microsoft’s own Windows Phone. (That smartphone operating system — which, despite being impressive, has scarcely dented the market dominated by the iPhone and Android — is getting a major overhaul, too, based on the same software core as Windows 8.)
New Windows 8 apps look nothing like their predecessors. They’re dramatically streamlined and run mostly in full-screen mode, without the drop-down menus, toolbars and other elements which have heretofore been standard equipment. They store stuff on Microsoft’s SkyDrive cloud-storage service, so it’s available on other Windows PCs as well as a bevy of additional gadgets and gizmos. And you can only get them from Microsoft’s own Windows Store app bazaar.
It’s possible to navigate Windows 8 with a garden-variety mouse, but it begs to be touched. So lots of Windows 8 PCs will have touchscreens, from otherwise conventional desktops and laptops to iPad-like tablets. There will also be machines which split the difference in new ways, such as Lenovo’s Yoga, a notebook with a 360-degree hinge which lets you fold the screen back into a tablet-like orientation.
Now, Microsoft hasn’t banished Windows in its more recognizable form altogether. A feature called Desktop is essentially Windows 7 embedded into Windows 8, and will run all of the gazillions of old-school Windows applications, and new ones yet to come, just fine. It’s just that it’s a nod to Windows as knew it, not the main attraction.
It’s not a given, though, that typical PC users are unhappy with Windows as they know it. Once they’ve learned how to do something on a computer, many of them want to keep on doing it the same way. According to analytics firm Net Applications, close to half of them cling to eleven-year-old Windows XP, an antediluvian operating system whose sole virtue is that it’s comfortably familiar. If they reject the incremental improvements of Windows 7, what are the chances that they’ll willingly enter Windows 8’s brave new world?
Microsoft, as you’d expect, thinks that the benefits of the new software’s up-to-the-minute design will be obvious enough to make the experience inviting rather than off-putting. “We felt very confident that people would be able to learn a few new concepts,” says Harris.
What Microsoft isn’t, apparently, is confident that PC manufacturers will show its ambitious creation off to best advantage.
It has reason to fret. Ruthless price competition grinds all the fat of the Windows PC business. That’s why remarkably powerful computers cost as little as they do. But it also tends to commodotize them, leaving the field short on the sort of polish and innovation which are Apple’s stock in trade.
With Surface, Microsoft is taking matters into its own hands. The initial version of the tablet features a Windows 8 variant called Windows RT, designed to run not on an Intel processor of the sort used by PCs but on a chip based on the same battery-efficient technology used by the iPad. It aspires for Apple-level industrial design and seamless melding of software and hardware. And just as Apple showcases its products in own retail stores, Microsoft will sell Surface itself in the fledgling 31-store Microsoft Store chain, plus another 34 temporary outlets it’s opening for the holidays.
Also Apple-esque: The cone of silence under which Surface was conceived. The staffers responsible for it toiled in secrecy in a high-security area at the company’s Redmond, Wash. headquarters; even their spouses were kept out of the loop. The company didn’t spill the beans to anyone, including its PC-maker partners, until last June.
The stealthy development was a major departure for the company, which has been known to begin hyping new stuff years in advance. “We didn’t want the world designing our product,” says Panos Panay, general manager of Surface. “And we didn’t want a me-too product. When you want to tell your story and know what it is, why not hold the cards until you’re ready?”
Microsoft has built hardware of one sort or another for most of its history – the Microsoft Mouse debuted in 1983 – and created a serious long-term hit in the Xbox 360 game console, as well as duds such as the iPod wannabe Zune. Still, it’s never attempted anything quite like Surface. “This product was built from the ground up,” Panay says. “Every single component was designed in this building and is new.”
Starting at $499 and weighing 1.5 pounds — the same price and heft as the current 9.7-inch iPad — Surface is undeniably iPad-like, yet it’s also notable for the respects in which it departs from Apple’s template. It’s got a 10.6” screen, larger and wider than the iPad’s, encased in a posh, sturdy magnesium case. There’s a built-in kickstand on the backside which flips open and shut with a satisfying clunk. Microsoft has also built in some PC-like features which the iPad lacks, such as a USB connector and a memory-card slot for extra storage.
At first blush, Microsoft’s Touch Cover ($119.99, or bundled with the tablet for $599) looks like the snap-on magnetic cover which Apple sells for the iPad. But it’s got a flat-but-roomy keyboard built into its interior. Fold it down, prop up the tablet with its kickstand, and you’ve got a rough approximation of a notebook computer. You can even run the full versions of Microsoft’s Word, Excel, PowerPoint and OneNote, all of which come bundled.
(Unlike Windows 8, however, RT doesn’t let you install other old-style Windows programs, just new ones from the Windows Store. A full-blown Windows 8 version of the tablet, Surface Pro, is due in early 2013.)
Microsoft getting into the computer hardware business represents a basic conflict of interest that nobody involved is particularly keen to discuss. Some of the PC companies I asked either refused to express an opinion about Surface or told me that they didn’t want to be be asked about it, period.
When Toshiba learned that Surface loomed in Windows’ future, “I wouldn’t be honest if I didn’t say we weren’t initially pleased,” admits Jeff Barney, vice president and general manager for its U.S. operations. Rather than brood, the company decided to focus on more powerful Windows 8 computers rather than compete too directly with Microsoft’s tablet — and to look on it as an ally in a greater war. “Innovative devices in the Windows ecosystem help us compete with Apple,” he says. “Surface is an exciting product, and it brings buzz to Windows.”
Buzz may help Surface and Windows 8 get off to a good start, but that’s all. Both the tablet and the software will ultimately be defined by the things they let people do — most of which will be enabled by third-party programs.
And most of those programs will take a while to show up. At first, the pickings will be slim: Windows 8 is starting off with just 5,000 apps in its U.S. Windows Store, vs. 250,000 iPad apps in Apple’s store.
Microsoft knows the importance of killer apps as well as anybody. “We understood quite well that Windows itself would be nothing if there weren’t a generation of applications that stood on top of it,” says Microsoft veteran Tandy Trower. “Apps were the key. Without them, it was just a piece of operating system software.”
Trower, who worked at the company from 1981 to 2009, doesn’t happen to be talking about Windows 8 — he’s remembering Windows 1.0, the product he was responsible for shipping back in 1985. Many things have changed about Windows in the past 27 years, but apps are still key.
Those with long memories may recall that Windows was a middling success with a meager software selection until Windows 3.0 arrived in 1990. So don’t be in too much of a hurry to judge Windows 8: For all of Microsoft’s audacity, the prospects for its new vision for its most important product may remain fuzzy until Windows 9 or Windows 10 comes along.
Still reading? Here’s the unpublished 2011 Facebook story I mention above, which got as far as the proof stage before biting the big one. It’s not quite final—the email I just retrieved it from acknowledged that it didn’t yet incorporate a small tweak I’d requested. But at this late date I’m not going to be too fussy, and I hope that you won’t be, either.