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Microsoft 'cautiously optimistic' about Christmas sales

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Microsoft is quietly confident it can avoid a repeat of the pantsing it took last Christmas with a triple consumer hit of Windows 8.1, Surface 2 and Xbox One.

Terry Myerson, installed chief of all things Windows operating system at Microsoft in a massive Microsoft re-org during the summer, told Wall St yesterday there’s growing optimism in the corridors of Redmond.

Fuelling that optimism are customer reviews on Amazon of products like the Dell Venue Pro that runs Windows 8.1, an IDC report showing Windows Phone is outselling the iPhone, and gamers’ demand for Xbox One.

“I think heading into the holidays, there’s quite a bit of cautious optimism that things are – this is going to be a good holiday for us,” Myerson told a Credit Suisse Securities 2013 Technology Conference. You can read the transcript here (registration required).

Last year’s Christmas shopping season saw Microsoft and Windows hit hard.

Hot off the back of Windows 8’s launch, PC sales saw their worst period since records began, according to some analysts. A confusion by newcomers over the new Start-buttonless Windows 8 touchy OS was blamed for exacerbating the problem.

Also, last year marked Microsoft's entry into the OEM space by making and selling its own tablets – the Surface and Surface RT. Their existence barely registered on the market and six months later Microsoft was left writing off nearly $1bn in unsold Surface stock.

Sales of Windows are important, according to Myerson, who seemed to indicate Microsoft expects these will assist uptake of Windows Phone.

Myerson told the conference "success" of Windows Phone is going to be proportional to the company’s "success" with Windows: “As Windows grows and becomes more vibrant… then they will want a Windows Phone with it. And so to me, the most important thing for Windows Phone success is Windows success.”

Myerson was tackled over Microsoft’s attempt to straddle consumer and enterprise. Of course, he said, Microsoft can serve both masters but he did suggest Microsoft is looking at different ways to deliver its same core product – Windows.

Wave-like, self-updating refreshes...

Microsoft’s platform chief indicated Microsoft could move to Windows on devices for consumers that update automatically while devices in the enterprise get new versions of Windows as and when they are ready to install – much like now. We're talking brand-new, landmark versions rather than updates.

He pointed out consumers want software that upgrades itself each time there’s a major new version release, but enterprises have to plan deployments as part of their mission-critical infrastructure.

For all its talk of BYOD, Microsoft now sees a difference between consumer devices and enterprise devices.

“With the consumer versions of our products and the enterprise versions of our products or the professional versions of our products, we will be focusing on serving each of those customers and delighting them, and there may be different cadences or different ways in which we talk to those two customers,” he said.

“And so it’s 8.1 – there’s 8.1, there’s 8.1 Pro and they both came at the same time. That’s not clear to me that’s the right way to serve the consumer market, it may be the right way to continue serving the enterprise market.”

As executive vice president of operating systems, Myerson leads strategy and development of Windows, Windows Phone and Xbox at the operating system layer. If anybody is in charge of saying how Windows will be developed and supported in future, it's Myerson.

But that’s all Myerson said. It could be he’s talking about the expected convergence between Windows Phone and Windows RT, where new versions of Windows would be pushed automatically to devices.

This would be more like getting a new version of iOS pushed to your iPhone or tablet, without needing to make the upgrade yourself.

This, though, would raise questions about Microsoft’s business model: whether it continues to charge for new versions of Windows and relies on sales of devices and services instead, or whether you don’t get a new version of Windows if you don’t pay a subscription.

Or, it might be Microsoft really intends to manage the rollout of new versions of Windows to devices at home and in business differently, although this would mean a lot of extra overhead for Microsoft to manage. ®

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