NEW YORK ( TheStreet) - Intel's ( INTC) latest numbers are proof that Microsoft's ( MSFT) new Windows 8 operating system is causing sproblems for the entire computer industry. Fewer people are buying new computers so Intel's computer chip sales are down. Net income ($2.05 billion) was off twenty-five percent - and earnings down 13 cents per share (from 53 cents to 40 cents per share) compared to the same time last year. The resulting revenue drop was in-line with analysts predictions. By mid-day, Intel shares were dropping 1.2% to $21.64 while Microsoft was slipping 0.7% to $28.78. Intel's big problem is Microsoft Windows. With tablets and smartphones now taking a large chunk of consumer computer spending - and others like ARM ( ARMH) and their processors profiting from the new trends - Intel has been depending on the newest version of Window to help PC sales grow. But, that's not what's happening these days. Windows 8 has not been what the industry had hoped for. For the most part, consumers are seemingly uninterested in purchasing new hardware running the latest software. Making matters worse, I've been hearing that those actually choosing to purchase new PCs are insisting that Windows 7 be installed instead of 8. So far, Windows 8 is an industry-wide flop. Microsoft could be working to help fix the problem. There are rumors that the next version of their operating system might downplay the boxy "Metro" home screen in Windows 8. A number of sources believe Windows 8.1 could give users the option to choose the more familiar Windows "Start" screen instead. Industry wags believe Microsoft is exploring the possibility of allowing users to disable "Metro" as their start-up screen in Windows 8.1. That major OS upgrade due is expected to be announced later this year. But Microsoft needs to fix numerous Windows 8 problems as well. One such problem is the way Windows 8 handles certain types of audio files. Numerous third-party sound devices experienced software "driver" problems with Windows 8 - a giant step backwards from Windows 7. The problems which should have been attended to before the software was allowed to ship. And, that's just one part of the problem.
I've heard that behind the scenes Microsoft is currently working to fix what's broken - up to and including replacing some of the technical minds involved. Hopefully, they can produce solutions in time for a Windows 8.1 release - rumored for the second half of this year. Microsoft has to do something - and do it quickly. There is an entire industry - and computer-buying public depending on them. Their rival Apple ( AAPL) doesn't have such problems. Written by Gary Krakow in New York