Microsoft (MSFT) has started to show-off a touch-screen function for its next version of Windows. That would allow a PC to function sort of like an Apple (AAPL) iPhone, as The Wall Street Journal points out. It also shows that the next versions of the Redmond OS may not be as hard to use as the current one, Vista.
The whole touch-screen deal really has absolutely nothing to do with the future of Windows. Microsoft knows that such features are for children and people who have never seen a keyboard. The real problem facing Windows 7, as the next OS is called, is that it probably cannot operate on the PC drives and will have to be set up to run on remote servers. Google (GOOG) and its new applications have made certain of that.
Microsoft will also probably have to sell Windows on a subscription basis instead of charging one fee up-front. That would also allow people to add features to the OS as Microsoft releases them. It is an outstanding opportunity for the world’s largest software company to actually make more money on the product by allowing users to make upgrades.
Wall St. misunderstands Microsoft’s internet strategy. It did not stretch to buy Yahoo! (YHOO) because the portal business is not critical the the future of the company, and, to a large extent, neither is search.
Microsoft needs to have a massive web presence to sell, install, run, and charge for the next version of Windows. It is a move toward a giant e-commerce operation built on server-based computing and the ability of customers to us Windows where they want to and when they want to.
There is many times more money in that than there ever will be in the search business.
Douglas A. McIntyre
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