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Windows 8: A soaraway Kinect? Or is it Red Ink Friday for Microsoft?

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The smart choice: opportunity from uncertainty

Can Windows 8 and Windows RT slabs bring the Kinect effect to Microsoft?

That’s the question as US shoppers and retailers begin a four-week shopping frenzy in the run up to Christmas.

It was just over two years ago Microsoft launched its hands-free game controller Kinect for the Xbox to wild and unexpected success. This was Microsoft’s second foray into hardware, as an add-on to its first - the Xbox.

Kinect sold in such numbers that by March the following year it had won a Guinness World Record for fastest-selling consumer electronics device in the world, with 8 million units sold in the first 60 days. Those were days that encompassed Black Friday and the Christmas holiday shopping period that is now, once again, upon us. Kinect was such a success Microsoft felt confident enough to return to the hardware pool with Surface, launched for ARM in October and with x86 Surfaces coming in January.

The day and weekend after Thanksgiving is traditionally when America goes shopping and Christmas starts. Last year, 226 million Americans bought $52bn of goods during the Thanksgiving weekend.

It’s a period when retailers offer discounts to encourage spending; this year, they’ve gone further with box stores such as giant Best Buy opening early to boost sales.

Amazon, Best Buy and Microsoft itself are offering money off and bundles around Windows 8 and Windows RT.

Amazon is reported to be offering deals on Windows 8 laptops in addition to Chromebooks. Best Buy, one of the biggest PC outlets in the US, is opening early this year – midnight Friday – with savings of up to $260 on Lenovo, Samsung and Dell Windows 8 PCs. Microsoft is reported to be offering free or discounted peripherals – sleeves and Touch Covers – with Surfaces. (This is a little rich given reports of the Touch Covers fraying.)

Will Black Friday help Microsoft and bring a Kinect like glow to Redmond’s numbers?

There certainly interest among consumers in Windows 8, but is it on a par with Kinect? Evidence says "no." Thirty-nine per cent of consumers who own a PC have said they are likely to upgrade to Windows 8, according to a Toluna QuickSurvey of 2,000 adults. The numbers are reported as a negative, but that statistic seems like a decent figure if not exactly the kind of run-away Microsoft had wished.

When it comes to tablets, however, Microsoft’s work is cut out: the proportion of those planning to buy a tablet running Windows 8 is the same as Apple’s iOS and Android – 13 per cent, 13 per cent and 14 per cent respectively. You might argue that’s decent considering the dominance of Apple and Android and the newness of Windows 8, and it’s certainly consistent with the survey we reported here that found demand among Windows users who want their own version of what Apple and Google offer.

But, there’s bad news for Windows RT, Microsoft’s break into ARM. Just two per cent plan to buy one of these breakout devices. On the PC, meanwhile, there’s a roadblock to sales of Windows 8 – it’s called Windows 7. This is the preferred choice for more than a quarter of consumers (28 per cent) and don't forget retailers are continuing to sell Windows 7 machines.

The survey illustrates the sales challenge Microsoft faces; there is interest but it’s not clear-cut. It's not clear whether it's at the same levels as on earlier releases of Windows; certainly, on the enterprise, side fewer organizations are as interested at this point in the release cycle as they were in Windows 7 according to a Forrester survey.

Certainly, it doesn’t seem to be the kind of firecracker interest that was Kinect.

Also, there’s a question over the potential power of Black Friday itself this year.

Last year’s Black Friday was hailed by the US National Retail Federation as a record-breaker: the period buoyed November sales by 4.5 per cent over 2010. However, the US Department of Commerce reported sales were up by just 0.2 per cent.

Fortunately, Kinect landed in the prior year.

Here’s what CBS wrote about how it’s not the coming few days that’ll make a difference to US retail sales, but the coming few weeks. With this in mind, it’ll mean the verdict on sales of Windows 8 and Windows RT also won’t be in for weeks.

CBS said:

“The myth is that they are the biggest shopping days of the season. This is proof reporters have never worked retail. The busiest in-person shopping day of the season is always the weekend before the Christmas. Always. The busiest online shopping days come right around those days when you can order something and still get it delivered before the holiday without paying through the nose for the privilege.”

Further, with continued economic uncertainty and the prospect of the US heading over a fiscal cliff in January, with possible tax rises further eating into the spending power of consumers, it also remains to be seen whether consumers will be confident enough to turn out and beat last year’s numbers.

As for those Black Friday discounts, it seems that, as ever, it’s the lumpen PCs – laptops and desktops this time running Windows 8 – that are the expendables and are bearing the brunt of the discounts from retailers. Microsoft and others are not cutting into the price of Surface RT, rather they are chucking in some extra peripherals.

There’s growing evidence to suggest Windows 8 and Surface won’t repeat Kinect and that they have lost the fourth quarter. The question at this stage seems by just how far. ®

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