Microsoft's Generation Gap

NEW YORK (TheStreet) -- It turns out that after Microsoft's (MSFT) big Windows 8 "reveal" this week, the company's biggest problem is not really Apple (NOK), or Google (NOK) or its OEMs.

Its biggest problem is a yawning generation gap between how it wants to do business and how today's young consumers want to do business.

Old-timers like me call this a channel problem. You remember the channel? My first year as a tech freelance writer, 1983, was mainly spent covering the channel. Distributors and retailers were a big deal then.

But when was the last time you walked into a store that sold computers with anything like a smile on your face? Even the consumer electronics channel, to which PC makers gravitated in the last decade, is very nearly dead.

Best Buy (BBY) was supposed to inherit the channel when Circuit City folded. But Best Buy's shares are down by one-third over the last year and almost 60% over five years.

In the 1990s Microsoft dominated the computer media with its advertising. An editor who criticized Redmond could find himself (or herself) hitting the bricks in a very big hurry. Now the remains of that day -- snarky bloggers mostly -- give the company as much respect as the late Rodney Dangerfield got.

If you even understand that last cultural reference, you are not the market Microsoft needs right now.

While Microsoft has fixed the technical glitches that bedeviled a generation, in other words, there is every indication it's too late, that it has lost the mandate of technology heaven.

Yes, the Xbox is the leading console, according to CNET But that market is getting smaller, not bigger, according to ITCandor.

AT&T (NOK), Verizon (VZ) and T-Mobile all intend to offer the new phones, but smaller carriers and prepaid plans -- the fast-growth segments of the youth market -- are still just considering it.

Meanwhile, the decision to offer Windows 8 only on new phones, and not allow upgrades to it (as reported in The Washington Post), has young reporters howling.

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