Microsoft's top task for Windows 10: Proving it's worth starting up

Has the technology industry passed Microsoft by?

That's the question the world's largest software maker, its customers, its developers and its rivals hope to get answered this week when Microsoft kicks off its annual developer conference. Called Build, the three-day event starts April 29 in San Francisco.

Microsoft's objective for Build is pretty straightforward: convincing the world that the newest version of its Windows operating system adds enough new features and technology to push the software forward and gain mainstream acceptance -- not become yet another detour.

Build has typically been a place for in-the-weeds discussions about cloud computing and software architecture. But with the coming of Windows 10, due this summer, along with promised new info on Microsoft's ambitious HoloLens headset, Microsoft followers see this year's Build as a cornerstone event for the Redmond, Wash., company and its CEO, Satya Nadella.

Everyone seems to get that there's a lot riding on what happens this year, with interest high in watching a show where an industry titan tries to regain its swagger. Tickets, priced as high as $2,100 in January, sold out in 45 minutes. In 2014, Build tickets didn't sell out for a full day.

Twenty years ago, Microsoft created a marketing frenzy for its then brand-new Windows 95 operating system. Ads featured the Rolling Stones singing "Start Me Up" to help signal the company's biggest, baddest transformation, which was epitomized by the software's seminal "Start" button.

Microsoft became the software king of the world in 1995. Today, the crown is gone.

The company may never regain that glory, say analysts. Nadella, who took over as CEO last year, would appear to agree. The 23-year-old Microsoft veteran quoted German philosopher Friedrich Nietzsche shortly after he assumed his post as chief executive last year, saying the company "must have courage in the face of reality."

For Nadella, that reality is now a need to prove to developers that Windows 10 can be the system software for all types of screens -- desktops, tablets, smartphones and whatever screens become popular in the future.

"Windows 10 is a Hail Mary," said longtime Microsoft analyst Roger Kay, founder of Endpoint Technologies Associates. "They need to prove that they're still relevant."

The promise of Windows 10

Microsoft isn't going away anytime soon. Last year, the company reported $86 billion in sales, with Windows running on 95 percent of the world's computers. But PC sales continue to decline as people turn instead to tablets and smartphones, according to research firm IDC. And that's bad news for a company that makes most of its money selling work-oriented software, while businesses increasingly rely on multiple devices, most of which don't run Windows.

Microsoft has a paltry 2.8 percent share of the mobile software market, which is dominated by Google's Android OS and by Apple's iOS software for the iPhone and iPad. That's a massive problem considering that 2 billion people -- or more than a quarter of the world's population -- will have a smartphone by the end of 2016, according to eMarketer.

It's also a big part of the reason that, when it comes to creating new apps, mobile and otherwise, developers rarely give Microsoft a second thought.

"They're so far behind on phones that they would really have to come up with something near an act of God even to turn it around," said Rob Enderle, an industry analyst with the Enderle Group.

Windows 10 has the potential to solve some of Microsoft's most pressing problems. "Windows 10 will be a service across an array of devices and will usher in a new area ... where the mobility of the experience, not the device, is paramount," Nadella told investors Thursday after Microsoft announced earnings and said that its profit topped Wall Street's expectations.

What that means is a promise to developers and consumers that Windows 10 will be a single platform to run all their apps on across all their devices. Developers will write to a single code base, allowing them to create a so-called universal app that will work across any device so long as that device runs Windows 10. Those devices can include phones, tablets, PCs, the Xbox One game console, TVs and even the new HoloLens virtual-reality headset.

"There will be one way to write a universal application, one store, one way for apps to be discovered, purchased and updated across all of these devices," Terry Myerson, Microsoft's executive vice president of operating systems, said at the September unveiling of Windows 10.

At Build, Microsoft is expected to talk about how that will work.

Even with that promise, there's a Catch-22. Windows 10 can't succeed if it runs on phones almost no one buys, powers tablets only some people use and is only installed on newer PCs -- most owners haven't upgraded their operating systems in almost six years.

"It doesn't matter how easy it is to develop for a platform if you can't sell a product because there are no users," Enderle said. Microsoft has "to convince these guys if they develop for the platform that they'll get compensated."

To give the software a push, Microsoft is making upgrades to Windows 10 easier on the wallet. For the first time, Microsoft is giving Windows away for free to users running Windows 7 or later versions. It's also offering its Office suite of apps free of charge on competitors' devices, like Apple's iPhone and iPad, in the hope those apps will prompt users to return to Windows products.

Microsoft's ultimate goal is to get consumers and businesses to subscribe to its cloud offerings, like the Office 365 subscription service. More software makers now view annual subscriptions as the gift that keeps on giving.

The company's cloud businesses are growing fast, too. Growth in that division helped send Microsoft's stock up more than 10 percent last Friday after its earnings report.

Avoiding a repeat of history

Windows 10 follows in the footsteps of some unpopular older siblings, prompting Nadella and Myerson to devote a lot of their time in public last year to reassuring PC users that Microsoft won't release a software product as misguided as Windows 8.

That version, released three years ago, attempted to marry mobile device gestures and interfaces to the traditional PC. It failed. To date, only 14 percent of the world's PC users run Windows 8 or Windows 8.1, while 58 percent run the 6-year-old Windows 7.

The marketing jingle for Windows 8, Lenka's "Everything At Once," presaged the faults of a program that bit off more than it could chew.

With Windows 10, Microsoft has a chance to win back some of its industry influence.

"You've got the potential for the same kind of disruptive event with Windows 95," Enderle said. "Google has the attention span of a 3-year-old and Apple thinks it's invulnerable. Microsoft has an opportunity -- if it can execute."

Let's hope they start by picking a catchier theme song this time around -- perhaps Daft Punk's "One More Time."