(MoneyWatch) Windows 8 has been seen by Microsoft (MSFT) and analysts as a make-or-break moment for the company. Far behind in smartphones and tablets, and looking at continued slowing sales for traditional PCs and laptops, Microsoft has to do something. The company cannot afford to make mistakes -- it doesn't have the leeway available to the likes of Apple (AAPL), Samsung, Google (GOOG), and others when, as inevitably happens, things go wrong with a new product.
A combination of internal habits and external realities are channeling Microsoft's efforts down some old paths, and the results could be no better than they have been over the last few years.
The primary issue for Microsoft is that its success has always been based on control of fundamental software: the PC's operating system and its Office suite of programs such as Excel and Word. And even Office's premier position in business productivity has benefited from Windows. Despite Microsoft's strength in server operating systems and its efforts in cloud services, it does not dominate any other category the way it has client operating systems. Without that area of strength, the company is strategically weak and competitively vulnerable.
Microsoft's strength has also been its weakness because the company has become dependent on its old lines of business. That dependency is evident in its approach to its also-ran position in mobile. The insistence on calling the new tablet software Windows RT is an expression of the company's desire to leverage its Windows brand.
Using the Windows name, however, led to confusion on the part of consumers, who expect anything with that name to run all Windows programs. RT, however, only handles specially-written mobile apps.
Can Microsoft change? CEO Steve Ballmer replaced former Windows head Steven Sinofsky with two Microsoft veterans, Tami Reller and Julie Larson-Green. Since they are insiders, the are likely only to keep the company moving in the same trajectory it has had for years under Ballmer. The strategic approach is so deeply baked that breaking out from it will be incredibly difficult.
And then there is the major external factor of Microsoft's past success -- its connection to the PC. Much of Windows 8 design is focused on touch screens. The vast majority of existing PCs and laptops use a mouse or a touchpad. Microsoft's approach to positioning has essentially told hundreds of millions of users, whether consumers or corporate, that Windows 8 isn't for them. Microsoft could have created two versions, one for touch and one for traditional machines, but it decided not to take that approach.
Microsoft has made some big changes in Windows, but what it needs is a big change in its strategy and understanding of how it might fit into the future of computing. And that hasn't yet appeared.