Windows 8: Some VARs Aren't Selling It, They're Replacing It

Greg Starr, a senior executive at I.T. Works, a Houston-based solution provider, typically spends his day talking business strategy with clients and vendors. But on a recent afternoon, with all his technicians deployed elsewhere, Starr sat at a desk putting Windows 7 --not Windows 8 -- on a new PC.

It wasn't the first time I.T. Works has installed the older version of Windows on a PC and it won't be the last either, Starr said. Six months after the release of Windows 8, corporate customers just don't want Microsoft's latest operating system, he said.

"I don't have any clients who say, 'Give me Windows 8.' They're saying just the opposite ... the thing came in on Windows 8 and we had to make it [Windows] 7 Pro," Starr said. "Most machines come with [licenses for] 7 and 8 both, and you choose which one you go with. All our clients are staying with Windows 7 Pro."

Starr's experience is far from unusual. Customers are rejecting Windows 8 with its tiles and lack of the customary Windows Start button in droves, solution providers say. They're even paying extra to have it ripped out. Altogether, the operating system that was supposed to herald a new era for the beleaguered PC market -- which continues to reel from the soaring popularity of tablets among both business users and consumers -- has fallen short of industry expectations.

"I wish we were getting demand for Windows 8, but we're not. It hasn't been well-received by corporate customers. And it's not even close to being implemented on a wide scale. It'll probably be at least a year before we see significant adoption," said Iris Sepulveda, sales and marketing manager for PR Computer Services in Guaynabo, Puerto Rico. "A lot of clients are still on Windows XP and most are happy with Windows 7, so our customers aren't even looking at Windows 8, let alone testing or evaluating it."

STICKING WITH WINDOWS 7

According to a CRN survey of approximately 300 solution providers, Windows 8 accounted for an average of 13 percent of survey respondents' total Windows-related revenue so far this year, compared with an average of 74 percent for Windows 7.

Seventy-four percent of solution providers surveyed said they do not believe Windows 8 is a solid operating system for their business customers today. Among those who said it is not a solid choice for customers, 62 percent said functionality improvements in Windows 8 are not significant enough to justify an upgrade. Sixty-one percent said Windows 8 training costs for customers are a barrier, and 53 percent said customers' business applications haven't proved to be stable to run on Windows 8 yet. More than 70 percent said customers are not interested in Windows 8.

In fact, customers' distaste for Windows 8 has some going so far as paying extra to have it ripped out: Among 70 solution providers who answered the question, 88 percent of respondents said they've sold and installed Windows 8 machines only to have to re-image the machine with Windows 7. More than half of the solution providers that have ripped out Windows 8 say they charge customers, some collecting fees of upward of $200 to do it.

NEXT: We Need A Start Button

Solution providers also were asked what it would take for Windows 8 to be a good fit for customers and 84 percent chose bringing back the Start button. Getting more applications tested and proved to work on Windows 8 was selected by 53 percent of respondents.

Stratos Management Systems, a Westlake, Texas-based solution provider, recently had some customers running older versions of Windows (including Windows XP, which Microsoft won't support as of April next year) bypass Windows 7 in favor of Windows 8. Then, some of those customers ran into problems and wanted to roll back to Windows 7.

"We sell [a customer] 300 desktops or notebooks or whatever and they want to load on Windows 8 because they want to try to deploy it. Then they say, 'We want to roll back to [Windows] 7.' I'll go in and bill them if they want to pay us to do it," said John DeRocker, senior vice president of worldwide channels at Stratos. "They run into compatibility issues with applications and they go back to Windows 7 because they know it's hardcore rock-solid."

In such cases, the customer has determined that it costs less to pay a solution provider to roll back Windows 8 to Windows 7 than to incur training costs and possible application integration snags that might occur with Windows 8, DeRocker said.

"The benefits customers think they're going to get aren't there. It's cool, but it's not going to give them what they thought. They don't have time for the training," DeRocker said. "Some customers want to slate it for a test for maybe next year. But this year? No."

Microsoft declined an interview request for this story but in an email statement, a spokesperson noted that more than two-thirds of businesses have completed deployment of Windows 7 and the company is encouraging companies to continue any current Windows 7 migrations but also pursue hybrid deployments of Windows 7 and Windows 8 for environments that involve mobile devices.

"Because of the compatibility between Windows 7 and Windows 8, businesses should consider deploying Windows 8 through the expanding array of tablets and touch devices available, along with dynamic line-of-business apps that continue to come to market. With Windows 7 and Windows 8, you get a great management experience and the ability to integrate both to meet your business needs," the spokesperson said.

Bill Hair, president of My Computer Guy in Rockwall, Texas, said the lack of the customary Windows Start button has been a major problem for Windows 8. "We're starting to do more Windows 8 business now, but to be honest the only reason we're doing it is because of the StartMenu8 add-on [from iObit] that we're installing for clients," he said. "Before that, we've had several clients where we had to uninstall Windows 8 because they couldn't find the Start button or menu and couldn't figure out how to close apps. So we downgraded them to Windows 7. The StartMenu8 is a free download and it's been a lifesaver. Microsoft would have sold 50 times more copies of Windows 8 if they had just put the Start menu back in."

Microsoft said last week it will address concerns about the OS' missing Start button in the forthcoming Windows 8.1 update, which adds a Start "tip" that will appear in the form of a Windows logo any time users mouse over the lower left corner of their screens. That and other new features are expected to debut in a preview version of Windows 8.1 June 26.

NEXT: CIOs Cite Migration Obstacles

CIOs CITE MIGRATION OBSTACLES

Several midmarket CIOs interviewed by CRN said they can't justify Windows 8 rollouts for their businesses. One CIO loves Windows 8 but said that doesn't mean her company is ready to switch to the new operating system.

"Personally, I like the new OS and plan to purchase a Surface Pro [tablet] in the next few months," Debbie Ward, director of IT at Heritage Texas Properties, a Houston-based real estate firm, told CRN. "Further, I have a Windows 8 phone [a Nokia Lumia 920], that I absolutely love. It truly is the best cellphone I have ever owned."

But all that love won't translate into a rollout of Windows 8 anytime soon for Heritage Texas, she said, citing the costs, training requirements, need to finish other projects and concerns about applications running on Windows 8.

"The training need is huge. Such a completely different OS will just add frustration to our end users, and slow productivity initially," Ward said. "Many have low tolerance for any form of change. Windows 7 is solid and reliable. Getting our users accustomed to the new Microsoft Office suite is enough change for them right now."

Heritage Texas primarily runs Windows 7 but still has some public machines in each branch of the real estate firm running Windows XP and some running Windows Vista. Those will be replaced this year, likely with Windows 7, she said.

Lia Sophia, a Wood Dale, Ill.-based jewelry manufacturer, still runs the majority of its business computers on Windows XP with only a smattering of PCs on Windows 7. Still, the company isn't likely to think about upgrading to Windows 8 for two to four years, said Bev Wesolowski, CIO and vice president of IT operations at Lia Sophia.

"We'd also need some compelling reason to move, i.e., needed functionality [or] customer pressure," Wesolowski said. "Windows 8 will need to mature and prove its backward compatibility with other 32-bit apps before being brought to the table."

The cost of integrating Windows 8 and ensuring that existing applications work seamlessly on the OS would be too much at this point, Wesolowski added.

"Costs are always a consideration. We'd also be concerned about our other applications and the impact," she said. "Certainly we'd only introduce this if it could operate with existing back-office and desktop applications."

NEXT: Distributors Weigh In

DISTRIBUTORS WEIGH IN

Part of the reason Windows 8 may not be hitting home with business users is that Microsoft spent most of its time marketing the OS to consumers and not to commercial customers through the first six months, according to several channel executives.

Microsoft failed to connect with the commercial market in part because it failed to connect with solution providers regarding Windows 8, said two distribution executives in separate conversations.

"From a commercial perspective, they need to do a better job articulating why enterprises should adopt Windows 8. They've done a great job articulating the consumer experience. Consumer adoption has been very good, but it's forced upon you. You buy a PC, it comes with Windows 8," said one of the distribution executives, who asked not to be named because his firm is a major Microsoft partner.

Compounding Microsoft's Windows 8 woes during the first six months was the fact that scant touch-enabled devices were available at launch, said the other distribution executive. "Applications are really built based on touch. That's where the OS is the most compelling. Unless you're upgrading your displays, there was no reason to upgrade and there weren't a lot of touch devices readily available until recently. That's created an even more lackluster response from the business community," he said.

Despite the problems cited by the distribution executives, Windows 8 is shipping on an increasing number of systems, according to data collected by The NPD Group. That data shows the percentage of PCs shipped through distribution with Windows 8 has increased each month since its release, compared with the percentage of PCs shipped with Windows 7.

According to The NPD Group's Distributor Track, the percentage of PCs shipped running Windows 8 has increased from 14.5 percent in November 2012 (the first full month of Windows 8) to 47.9 percent in March 2013. Meanwhile, NPD's VAR Track, which aggregates sales data from 650 SMB solution providers, finds a similar trend. The percentage of PCs sold with Windows 8 increased from 15.6 percent in November 2012 to 40.7 percent in March 2013.

However, Windows 8 has grown at a slower rate than Windows 7 when it was released three years ago, according to NPD. By January 2010, after it had been shipping for three months, the percentage of PCs sold running Windows 7 had already reached 60.3 percent and climbed to 75.8 percent by April 2010. Of course, Windows 7 was gaining traction at the expense of the much-maligned Vista and older XP versions of Windows.

Some vendors have blamed declining PC sales on Windows 8. For example, Hewlett-Packard CEO Meg Whitman told CRN in May that the press around Windows 8 "was not perfect" and HP doesn't see a big demand for the operating system among its business customers. Customers are upgrading from Windows XP to Windows 7, she said.

One distribution executive told CRN he expects Windows 8 adoption to ramp up more quickly in the first three months after the Windows 8.1 update is released than in the first six months to date.

"I understand there are some tweaks that need to be made, some things that seem strange right now. But also keep in mind, anything Microsoft does will be compared with iOS and the overall Apple experience, which is a more mature experience than Windows 8 is today," he said. "My view is that they get it right and it becomes a smoother experience as they do the next major release of it."

But Microsoft also needs to improve its commercial messaging around integration across different classes of devices, from desktops to phones, the executive said. More enterprises are going mobile and Windows 8 can be a conduit to accelerate that trend, but that message isn't being effectively communicated to the channel, he said. "I'm very much embracing it myself. I understand it and use it. What I'm hoping for is a fully integrated experience, to take advantage of SkyDrive and to adopt Lync as well. Once people understand the full benefits of it, that you can use any device and have a consistent environment, have access from anywhere, I think then the lightbulb will go on," he said.

NEXT: Will The Update Help?

WILL THE UPDATE HELP?

In addition to the new Start "tip" feature, the Windows 8.1 update -- which Microsoft has said will be available in late 2013 -- will include improved built-in apps, a search function with enhanced aggregation of search results, and PC settings that allow users to more easily access settings. The update also will come with Internet Explorer 11, which will feature faster page load times and the ability to sync open tabs across multiple Windows 8.1 devices.

Will all those changes be enough to convince customers to make the switch?

Michael Goldstein, president of LAN Infotech, a Fort Lauderdale, Fla.-based VAR, said the new features are evidence that Microsoft is listening to customers.

"Some of the enhancements will make it easier to use and are really going to make a big difference," Goldstein said. "The keyboard and mouse movements are really big. We have a couple Windows 8 tablets and they didn't move as well as iOS."

On the other hand, Derek Davis, principal and managing partner at Intelli-Net, a Greenville, S.C.-based solution provider, thinks Microsoft needs to go further.

"In terms of corporate acceptance of Windows 8, I don't necessarily think the 'tile look' of Windows 8 is helpful ... but changing the habit of pressing a 'Start' button is hard to do," Davis said. "It would also be nice if we could turn 'off' the Tiles interface for nontouch appliances -- like desktops."

Garry Hickerson, senior account manager at Infian, a Richmond, Va.-based solution provider, doesn't see Windows 8.1 making much of a difference for customers.

"End users are looking for speed and ease of pointers for productivity. They don't need their production software to mimic a social media setting with 'tiles' and 'apps'. A road warrior shouldn't have to go through clicks and searches to find a printer/scanner connected to their system," he said.

"With the demands put on workers these days, it is critical that they have one-click access to all of the available programs and devices at their disposal. I personally just needed to scan receipts from a recent business trip," Hickerson added. "I had to search for the control panel [in Windows 8], then select all devices and printers and then select my scanner just to start that project. With Windows 7, I just pulled up that device from my Start button. Apps and tiles are fun, but let us get our work done quickly in order to have any time to enjoy them."

ROB WRIGHT contributed to this story.

PUBLISHED JUNE 3, 2013