8 things Microsoft is doing wrong

A few days ago, Tami Reller, Microsoft's chief marketing and financial officer for Windows, announced that the company had sold 40 million Windows 8 licenses since October 26 -- the day the new operating system launched. All puns aside, on the surface that seems pretty impressive, but recent articles by CNET and others indicate a much shakier start for Windows 8 and the hardware hinged to it.

On November 29, an article by the New York Times cited poor sales figures for both Windows PCs and tablets from NPD, the retail sales tracking firm, painting "a darker picture of the Windows 8 introduction."

According to NPD, unit sales of Windows PCs in retail stores in the U.S. fell 21 percent in the four-week period of October 21 to November 17 compared with the same period a year ago. And sales of Windows tablets have been "almost nonexistant" (less than 1 percent of all Windows 8 device sales).

Windows 8 was supposed to jump-start sales of PCs, not help them drop off. So what's wrong?

Well, plenty. Microsoft, of course, is a huge company that's flush with cash. It can afford to make mistakes. The 8-figure kind. And making them it is.

With that in mind, I've put together a little "best of" list of Microsoft's faux pas. Feel free to agree or disagree and add your own items to the list (yes, there are more, but I figured eight was enough).

1. Windows 8 upgrades cost too much
I have four or five Windows machines sitting around at home that I'd consider upgrading if I got more than one license for $40. The fact is, I'm fine running Windows 7 -- which is pretty darn good -- and don't see any compelling reason to upgrade the machines, particularly because none of them has a touch-screen display. I've also gotten used to Apple's new system of allowing you to upgrade at least five machines that have your iTunes account (App Store) once you buy an OS upgrade for $20.

Granted, Windows 8 is a bigger upgrade than Apple's yearly changing of the felines, but I'm just not a one-license kind of guy anymore. I want more. At least three, preferably five. Call me cheap, but I just don't see myself upgrading until Microsoft offers up a better deal.

2. The muddle of Windows RT
I was shocked when a few months ago someone told me Microsoft's Surface RT tablet didn't run Windows 8 Pro but Windows RT, which doesn't run older Windows programs.

What the heck is Windows RT? Windows Retweet? And why would you put out a Windows RT tablet and then follow it up with a "real" Windows 8 tablet a few months later that does run legacy Windows software?

I actually think the Surface hardware is nice -- and so did our reviewer, Eric Franklin -- but I'm not itching to run out and buy one since it doesn't offer a unique, killer feature that makes it seem better than the competition. Oh, and I'd rather wait for a real Windows 8 tablet that costs the same as an iPad.

3. Overpricing the Surface Pro tablet
When Microsoft unveiled its tablets several months back without revealing the pricing for them, a lot of folks assumed the higher-end model, the "real" Windows 8 tablet, the so-called Surface Pro, would be pretty pricey. They were right. Recently, Microsoft said the Surface Pro would start at $899 without a keyboard (the keyboard costs $100). Why wouldn't I just buy an ultrabook with a touch-screen and twice the battery life for around the same price?

4. The confusion over touch-screen vs. non-touch-screen Windows 8 laptops
A few friends have e-mailed asking me which Windows 8 laptop to buy. I tell them we here at CNET are recommending that folks buy a Windows 8 notebook with a touch screen. I've played around with a few Windows 8 notebooks and our laptop gurus, Dan Ackerman and Scott Stein, have reviewed several models. They both think touch-screen is the way to go -- and so do I. With its tile-based Metro interface, Windows 8 simply lends itself to being a touch-screen interface.

Needless to say, this creates some confusion for consumers. I keep watching these Windows 8 ads on TV and I'm seeing a Sony and a Dell and some other machines (we like the Lenovo Yoga and Acer Aspire S7). I have no idea which machine to buy, so I think to myself, "I'll wait for the dust to settle and hold out for next-generation Windows 8 devices to hit the market in 2013 before I'll seriously consider buying one." (Side note: I own both Macs and Windows machines and I'm writing this article on a Windows machine at work. I'm in the market for a new Windows machine at home because my young kids use only Apple devices and I want them to be exposed to Windows before they completely succumb to Apple.)

5. Failure to have developers buy in
On the same day the New York Times cited those NPD numbers, it posted an article titled "Microsoft Faces 'Year of Reckoning in Mobile Software,' IDC says." It cited an IDC survey where 33 percent of developers who replied to the survey said they were very interested in writing applications for Windows 8 tablets and 21 percent for Windows Phone 7 software. (Why they were polling for Windows Phone 7, and not Windows Phone 8, I don't know.) That's compared with 85 percent of developers who were interested in writing programs for the iPhone (83 percent for iPad) and 76 percent for Android phones (66 percent for Android tablets). Needless to say, the numbers looked bleak for BlackBerry devices.

As part of the study IDC opined that, "Mobile platforms that fail to crack the 50 percent barrier of developers who are 'very interested' in developing apps for them will be on a gradual track to demise."

In other words, unless Microsoft does a better job getting developers on board fast, it's looking at a downward slope, and not the good kind.

On that note, I spoke to a major developer who was completely unimpressed by Microsoft's Windows 8 launch in New York City.

"They pretty much just showed their apps," said the developer, who didn't want to be quoted by name in this article. "And when we met with them, they just didn't provide any real monetary incentives for us to develop apps for them. At this point, it's hard to justify putting the resources forward to develop for their smartphones and tablets. We can't make any money."

6. Not seeding enough influencers with Windows phones and tablets
In recent years Microsoft has spent millions of dollars on expensive advertising campaigns. That's fine. That's what big companies with lots of money do, even if they sometimes yield lackluster results. However, I would argue that Microsoft's media outreach has been suspect in recent years. Of course, it depends on which media you talk to, but I personally have had little to no contact with Microsoft's PR folks (they have two agencies) and couldn't tell who does what for them. I've barely used any of their mobile devices except in passing. Granted, I'm not very important, but I have written a lot of articles about Apple's, Amazon's, and Google's products.

This is just anecdotal evidence, but it's also worth noting that we never got a Surface tablet in CNET's New York office (we have one in the San Francisco office). We do a lot of video here at CNET and several of our editors regularly appear on TV, particularly during the holiday season. It's pretty hard to show or talk about a product if you don't have it.

Consider Microsoft's big Windows 8 launch event in New York City on October 25. A lot of folks were expecting an "Oprah moment" for media attendees, with Steve Ballmer promising Surface tablets for all. Instead, journalists got a redundant walkthrough of the new OS.

In the meantime, Samsung is doing big events in New York for its Galaxy phones (S3, Note II) and doling out hundreds of review samples for the press to try out. The same goes for Google, which routinely showers Google IO attendees with the latest Nexus tablets or phones. Apple did it with the iPod. And Amazon did it with the Kindle, too.

It may sound crass, but that's how it's done. No, it's not about "buying off" the press with free stuff. It is about letting key influencers -- journalists, bloggers, college students -- live with these radically new operating systems for weeks, not just a few minutes at a press conference. Microsoft needs to get more people using the devices -- and evangelizing them -- before developers will truly buy into the platform. And the company won't get that with traditional advertising.

7. No 'hero' phone for Windows 8
Apple has always had the advantage of coalescing around one phone, the iPhone, whatever generation it is. Yes, the Android market is fragmented, but some of the Motorola models have stood out early, and now the Samsung Galaxy S3 is a true Android star.

As for Nokia delivering a killer Windows 8 phone, that hasn't quite happened yet. The Lumia 920 is appealing, but it just doesn't have the pizzazz or a strong enough ecosystem to lift it past rivals in such a competitive market.

Microsoft needs its iPhone 5 or Galaxy S3 to have a chance -- and it just doesn't have it yet.

8. Missing the opportunity to expand Xbox brand
Microsoft has built a great brand with the Xbox and has been very successful in conquering the living room, with a huge core of loyal users. But Microsoft has failed to build on the Xbox brand across other platforms.

As my colleague Jason Hiner has argued, Microsoft's smartphone should have been the xPhone, not a Windows product (ironically, Windows 8's tile-based interface has its roots in the Xbox's interface). Microsoft's been spending all this money trying to make Windows devices look hip and cool when the Windows brand just isn't that hip and cool, and I'm not sure it ever will be. You can argue over what it stands for now, but I don't think "hip" would make the top five in a Family Feud survey.

Xbox, on the other hand, has an identity more closely tied to the audience Microsoft seems to be going after today. I would have gone with the xPhone. But what do I know?