Chris Lau, Kapitall: Microsoft (MSFT) was prompted to update its Windows 8 operating system after weak sales for the platform. Dubbed simply as Windows 8.1, the preview was made live on the Windows Store. Is the refresh going to help sales in Windows software? [Read more from Chris Lau: NVIDIA Licensing Is Good News for Investors] Start button returns Windows 8.1 brings back the much needed Start button. The inclusion helps user navigate more seamlessly between the Start screen and the desktop. Click here for a video of the Windows 8.1 preview. Apps may now be custom organized In Windows 8, the master list of apps was presented in alphabetical order. Microsoft now gives users the option of viewing apps by category, by date installed, or by most-used. SkyDrive deeply integrated SkyDrive, which lets users save and access files to the cloud, is more deeply integrated in Windows 8.1. This gives Microsoft’s ecosystem more stickiness with users, since devices and computers running SkyDrive will be available from one device to another. Files uploaded to the drive are available within seconds on other devices, without the need for users to take additional action. Cloud storage is a rapidly growing service. Dropbox, a competitor to SkyDrive, is thought to have doubled late last year, to 100 million users. Users save a billion files every 24 hours. App Store updated Apps will become a source of revenue for the Windows 8 platform. Apps were made popular by Apple Inc. (AAPL), so Microsoft has lots of work to do to catch up. Microsoft made the “top paid” category more prominent on the main screen. A recommendation engine was also added. The two updates should help drive app sales. Analysis and conclusions Sometimes change is good, but when key interface features are altered – adding to the confusion - users will not accept the change. Microsoft did well to recognize the need to boot to desktop, returning to a familiar screen with a “Start” option. Despite the attempt, Microsoft may not have gone far enough to improve the interface. An external “Classic Shell’ is already available for users who want a Start-like interface.
Microsoft’s challenge is creating an operating system that is suitable for both a tablet, which has a touch interface, and a desktop, which uses a keyboard and mouse. Despite the challenges, Windows 8 is faster than Windows 7. It boots faster, provides better management utilities for users, and fits the needs of both consumers and power users. If Microsoft and its hardware partners market the improved performance, the software giant could see stronger Windows sales.Weak sales for Windows 8.1 could also be bad news for Hewlett-Packard (HPQ). Shares are up nearly 25% in the past year, helped by cost-cutting and better sales results. Investors do not anticipate Microsoft’s Windows 8.1 to be a catalyst for higher PC sales, which explains low forward P/Es. Microsoft trades with a forward P/E of 11, while HP trades at 7:
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Written by Chris Lau, Kapitall Contributor