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Windows 8.1 fall release won't save Microsoft

(MoneyWatch) Microsoft (MSFT) will release Windows 8.1 in the U.S. on October 18. The free update of the company's flagship operating system is aimed at placating the many customers who are unhappy with the new platform.

Yet while Microsoft is making changes to its latest version of Windows in response to widespread consumer and business dissatisfaction, the software will remain fundamentally the same. For Microsoft, the question is whether it can effectively drive adoption of Windows 8.1 by ending sales of Windows 7-based machines and by patching up its latest OS.

Although Microsoft has expressed satisfaction with Windows sales, it has withheld more specific results. According to a new company website, it has sold more than 100 million Windows 8 licenses to date. But the site doesn't explain what is included.

In January, Microsoft said that it had sold 60 million licenses, including both licenses sold to PC manufacturers and upgrades. To be clear, that likely doesn't mean that 60 million end users had purchased licenses, either as upgrades or with new machines.

The 100 million figure was also what Microsoft used in May when it was trying to show that Windows 8 was selling as well as Windows 7. Would Microsoft had crowed if it had hit, say, 150 million licenses? You might think so, as that could help disperse the negative publicity the company has gained.

In conversations with Microsoft analysts and companies selling to large and small corporations, people have largely told me that Windows 8 has been a big market disappointment for two reasons. The first is the interface. Windows 8 isn't all that difficult to get used to if you're using a touch device -- but most people aren't. "Painful" is what one person who deals with corporations of all sizes said of using Windows 8 on a non-touch computer.

The combination of some interface changes that restore a start button and let someone boot to the traditional Windows desktop might help, but even that isn't providing the same look and feel. (The start button reportedly doesn't bring up a list of programs to choose from.)

In my past discussions with Microsoft, the company has told me that it expects Windows 8 to take off when people and companies upgraded their hardware, particularly to new sleek all-in-one PCs with touch capability and to new laptops and combination notebook/tablets. And there's the second problem: To upgrade, many consumers and corporations need different -- and generally more expensive -- hardware.

Trouble is, PC sales are dropping precipitously. They're facing the longest decline in their history because many users have realized that much of what they do on a computer can be done on a tablet or even smartphone. Sure, lots of people still need PCs, but nowhere near as many as in the past.

Microsoft opened the gate to such a choice by being late to mobile and by making customers uncomfortable with what had been a reasonably traditional upgrade pattern. If people don't buy the machines, they're not going to switch to Windows 8, 8.1 or any other variation of the software.

The company does have one big club in its toolkit. It will eventually stop licensing Windows 7 on new machines and force people to get used to the new software. But in the end that may only accelerate the migration of many away from PCs and towards tablets that run something other than Windows.

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