Can Windows 8.1 Save The PC?

NEW YORK ( TheStreet) - A lot of computer manufacturers, employees and their fans are banking on Microsoft ( MSFT) coming-up with a miracle cure to keep personal computers alive. In the long run, I'm not sure there is much anyone can do to keep easy-to-use, lower-cost tablets from world domination. However, Microsoft is going to try its best to stem the tide.

There is still a huge user base who prefer personal computers over tablets to complete certain tasks. That means there are still millions of PC users who look to Microsoft to keep improving its Windows operating system. Unfortunately, last year's Windows 8 was not the solution.

For many used to doing their tasks in a Windows 95/98/XT/Vista/7 environment, Windows 8 turned out to be a nightmare. Adapting to navigating the new operating system was difficult. And, the software was meant to be used on new, touch-screen devices which few users owned or wanted to buy. Windows 8 could be used on non-touchscreen devices but the Win 8 "experience" was even worse for those people. Businesses weren't ready to upgrade their hanrdware to run Win 8.

So, the PC industry placed all of its bets on that new OS and lost. Not enough buyers of any kind came to the table. At the same time Apple ( AAPL) iPads and Google ( GOOG) Android-based tablet sales soared. Microsoft had to do something. That something is Windows 8.1.

Currently in beta, Windows 8.1 addresses some of the problems of the last year's Windows 8. We have installed the Windows 8.1 Preview software on a number of devices including notebooks, touch-screen laptops, and two Windows RT tablets. It is a big improvement over last year's software. Some features still need work. For instance, the handling (actually mishandling) and playback of digital music files is but one problem area.

There are fundamental changes in how you navigate from one screen to another in Windows 8.1 making many operations easier to accomplish. The largest improvement is the addition of an on-off switch allowing users to boot directly into the old Windows "Start" screen rather than the newer horizontal rows of boxy icons. That screen is still available but now you can choose to land in the more familiar setting when you turn on your computer.

Microsoft blew it when it came to introducing Windows 8 last year. Aside from over pricing the new devices they introduced two different versions of the OS and confused the buying public. Windows RT was Microsoft's new operating system made to run on ARM Holdings ( ARMH)-based processors. Many buyers thought they were getting the same exact software with the same features as Windows 8 but at a lower price.

That is not the case. Windows RT won't run anything other than special applets which can be downloaded from Microsoft's Windows RT online store - similar to the way users get apps for their Android and iOS devices. RT tablets do come with a free version of Microsoft Office but many of the legendary applications can't be installed on an RT tablet.

Once the word got out Windows RT computers sat waiting on retailers' shelves. Because of that Asus has just joined Samsung, Lenovo and HTC in ending Win RT tablet production. Hewlet Packard ( HPQ) refused to make RT devices in the first place. That leaves Dell ( DELL) and Microsoft as the only two WinRT manufacturers left.

Microsoft has started to make the right moves even though it was probably for the wrong reason. Microsoft decided to lower the price of its Surface tablet computers - both Windows 8 and Windows RT models to get rid of the old stock and make room for new devices coming later this year. The Surface RT is now priced at $349.

In the past two weeks I've had the chance to use one of Microsoft's Surface RT tablet/notebook devices. I played with it for a few minutes before upgrading the software to the Windows 8.1 Preview. The tablet changed from questionable to enjoyable. The hardware is terrific and the software now comes a lot closer to matching that quality level.

Looked at as a tablet - not as a PC - the $349 Surface RT with Windows 8.1 is quite competitive. Especially now that Microsoft throws in the less-expensive, flat-key keyboard/cover (usable although the optional "Type Cover" with real moving keys is better).

If you're heavily invested in the world of Microsoft PCs the Surface RT could be a useful tool. It should never have been saddled with its original high price. $349 is more like it. Even better would be a Surface RT for $299 or even $249. If Windows RT is to survive it will have to compete price-wise with rival products like Google Chromebooks and Android tablets.

The clock is ticking. There are reports that Microsoft will release the software to PC manufacturers later this month. The formal introduction of Windows 8.1 and probably second-generation Surface tablets will come mid-October just before the unofficial start of the holiday buying season.

The PC industry is waiting.

--Written by Gary Krakow in New York.

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Gary Krakow is TheStreet's senior technology correspondent.