Microsoft's Life Preserver for Windows: 3rd Party App Store

Last Updated Aug 18, 2011 11:27 AM EDT

It might seem like a case of Microsoft (MSFT) copying Apple (AAPL): Windows 8 will have an app store much the way Mac OS X Lion just introduced the feature. But this has a lot less to do with Apple (AAPL) than with Microsoft's recent earnings reports.

Windows sales have been in decline for some time, which is bad news for Microsoft, because it and Office have been the company's main cash cows. But times change. Mobile grows like a weed and Microsoft has been fairly frozen out of the smartphone market. Macs continue to take a larger share of PC sales. What's Microsoft to do? Grab a percentage of the software sales for Windows machines, cutting out retailers, through a Windows 8 app store.

Window's future: a long, cold winter
PCs won't disappear tomorrow, but in the long run, their day is done. In the short run? Fueled by its success on the smartphone and tablet fronts, Apple continues to pull in new users for more of its product lines, including Macs:
In its fiscal year 2011, Microsoft's sales of Windows and Windows Live dropped by 2.4 percent. It's not a massive change, but an important one. In the future, Microsoft won't be able to rely on Windows desktops to keep dragging in as much money as they have.

Follow the money
What buoyed Microsoft in FY 2011 were Windows server and tools, Office, and games. But if the company wants to continue to grow, it needs more revenue. Windows 8 will give a big bump, but Microsoft wants to set the continuing baseline revenue higher, particularly if it can't sell as many copies of Windows 8 as it did of Windows 7.

Enter, Apple's idea of integrating an app store into Mac OS X. Apple wants both more revenue (it's hard to keep growing even at a quarter of the size it has reached) and extended control over all its users and the extended ecosystem of products and services.

Microsoft has traditionally been wary of such control because it has relied heavily on its many resellers. But as more people download software, the ability for those distribution partners, particularly those focused on consumers, to provide incremental sales keeps dropping.

Microsoft's plan won't be popular with the resellers, but the company may have come to a point where it can safely afford to ignore them. Given the many millions of Windows users, to even tap a small portion of potential software buyers could mean additional billions in revenue.

Related: Image: morgueFile user dieraecherin, site standard license.
  • Erik Sherman On Twitter»

    Erik Sherman is a widely published writer and editor who also does select ghosting and corporate work. The views expressed in this column belong to Sherman and do not represent the views of CBS Interactive. Follow him on Twitter at @ErikSherman or on Facebook.

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