Commentary

Microsoft Will Be On The Avenue, Fifth Avenue, As It Rebrands OS

Microsoft is not only coming to Fifth Ave. in the near future, we learned definitively over the weekend, it will also give invited analysts and reporters a peek at — and put a name to — its latest operating system at a special event in San Francisco tomorrow.

Nailing down rumors that the New York Daily News’ Katherine Clarke first floated in early August, the Wall Street Journal’s Keiko Morris discloses that Microsoft will open its first full-fledged retail operation in New York City at 677 Fifth Ave. in a two-story space last occupied by Fendi. It’s just a few blocks south of Apple’s cube at 767 Fifth.

“As our first flagship store, it will serve as the centerpiece of our Microsoft Stores experience,” David Porter, corporate vice president for Microsoft retail stores, tells Morris. “This is a goal we've had since day one — we were only waiting for the right location. And now we have it.”

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It won’t come cheaply. “Rents for ground floor stores on prime Fifth Ave. are the priciest in the nation and have been topping $3,500 per square foot in recent deals,” one real estate broker who was not involved in the negotiations told Clarke.

In “an aggressive push to broaden its retail reach and directly connect with its customers,” Morris reports, the company has opened 104 stores in the U.S., Canada and Puerto Rico over the last five years in playing catch-up to Apple, which currently has 254 retail outlets. Porter claims, without divulging details, that the Fifth Ave. location will be “much more than just a Microsoft Store.”

And tomorrow’s naming ceremony for the new OS will be much more than a run-of-the mill upgrade, most observers feel. CEO Satya Nardella is traveling in Asia and will not be at the event but his influence will be reflected.

“The name change is symbolic of a new direction for Microsoft moving away from an aggressive focus on Windows and PCs, the hallmark of previous chief executive Steve Ballmer,” writes Samuel Gibbs in The Guardian. “The new, quieter emphasis is on selling services across all devices and is championed by new boss Satya Nadella.”

“Forrester analyst Frank Gillett says one of Microsoft's goals will be to make keeping Windows on your PC up to date as simple as keeping your phone operating system up to date,” writesUSA Today’s Nancy Blair. “With this next version I believe they are aiming for what I would call in a tongue-in-cheek way 'the last Windows upgrade,’” says Gillett.

“The switch also represents a desire to erase the ill-will generated by Windows 8, an ambitious attempt to redesign Windows with tablet users in mind, which ended up annoying and confusing the core market of customers who use mice and keyboards,” writes Reuters’ Bill Rigby in breaking the story. Rigby says that the new OS “will likely get an entirely new brand, or just be called Windows.”

“Windows 8 was not a shining moment for Microsoft,” Gartner analyst Michael Silver tells Rigby. “Probably the biggest issue that lingers is the negative brand equity in the name.”

But the underlying issue CEO Nadella faces is the decline of PC-based computing in general — representing just 14% of sales last year, according to Gartner’s data. 

“Microsoft is changing from a company that was Windows-centric to one that is services-centric," says Silver. “It has to be that way. Windows revenue is likely going to decline, and Microsoft's task is to replace that Windows revenue with revenue from services on all sorts of platforms.”

“Microsoft currently refers to what we'll call Windows 9 as Windows Threshold or Windows X internally,” reports Tom Warren on The Verge. “The Windows X moniker is likely a placeholder and not final naming, but a tweet in jest yesterday from myself and fellow Microsoft watcher and ZDNet reporter Mary Jo Foley generated a surprise response from Windows chief Terry Myerson. 

“We're still deciding, but thanks for your vote,” joked Myerson, alongside an image of him covering his lips to mimic our original “ssh” Tweet. 

As for the OS itself, sources say that the first public test build is expected to be released by early October but it “won't be a developer preview and it won't include all of the features Microsoft is building into its next version," writes ZDNet’s Foley, linking to a piece by NeoWin’s Brad Sams. 

“It will, however, be aimed at showing business users who are running Windows XP, Windows Vista and/or Windows 7 that Threshold is something they should want instead of fear,” Foley continues. 

That would be a good start.

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