Need to Know: Windows 8.1 Update 1 and Windows Phone 8.1

In recent weeks, information has emerged about Windows 9, code-named Threshold, which is due in April 2015. But that's still 18 months away, and Microsoft plans to deliver other Windows updates in the interim, updates which—despite their apparently minor version numbers—are arguably just as important for anyone using Windows. So let's take a look at the immediate future of Windows.

Windows 8.1 Update 1

As soon as early March, Microsoft will release its first major update for Windows 8.1, one that adopts the servicing model and naming convention of Windows Phone. This makes sense, as it turns out, since Microsoft's newly-minted Operating Systems business unit is run by Terry Myerson who--wait for it--used to run Windows Phone (before Steve Ballmer blew up the old corporate structure as part of a massive corporate reorganization).

Windows 8.1 Update 1, as this new update is called, can be seen as a single step on the path towards a consolidation of Microsoft's client OSs, a much-needed change that seems to be the primary overreaching goal of the Myerson era. As such, it might not seem particularly far-reaching, but it does continue many of the themes we saw in the initial Windows 8.1 release while providing a peek at the direction from which coming updates will continue.

That is, with Windows 8.1, Microsoft sought to quiet its critics and appease those customers—in particular, corporate customers—who were none too pleased with the mobile-first philosophy of Windows 8—while not stepping back from the overall strategy of making Windows a first-class mobile experience as well. In this, they were successful: As I've written before, Windows 8.1 makes it possible for users on traditional PC hardware to mostly ignore the "Metro" mobile interfaces that bother them so much, while likewise allowing those brave few who have adopted new Windows tablets, 2-in-1s, and other hybrid PCs with multi-touch capabilities to keep their desktop interactions to a minimum.

Keeping everyone happy seems to be job one at Microsoft these days, but if you really think about what happened in Windows 8.1, you might see the underlying problem: Sure, the system works better on new and old PC designs than did Windows 8, but it doesn't help the OS seem cohesive, with two operating environments—or "personalities"—that work together. The jarring gulf between the desktop and Metro is, if anything, even wider in Windows 8.1 than it was in its predecessor.

We already know that Windows 9 will help bridge the desktop and Metro worlds by letting Metro mobile apps run on the desktop in windowed modes, and by returning—as an option—some form of a Start menu. But Windows 9 won't ship to customers until April 2015, Microsoft expects, and its year-long gestation suggests that it won't be a particularly major release, but rather something akin to Windows 8.1. In fact, my sources tell me the "Windows 9" naming decision is based more around a desire to distance the OS from the poorly received Windows 8.

So if Windows 8.1—and, later, Windows 9—are evidence of what the OS team can accomplish in one year of development—and they are—we might rightly look at Windows 8.1 Update 1 as what they can accomplish in less than half that time. In fact, the total development time of Update 1 might be closer to four months than six months. (This, too, seems related to Microsoft's schedule for Windows Phone 8 updates: The firm shipped three of them, the last called Update 3, in about a year.)

And what might those accomplishments be, you ask?

In the theme of being a step towards a more consolidated future, Update 1 will add the ability to pin Metro mobile apps to the desktop taskbar so that they can be launched from there. (You can currently pin both types of apps, Metro and desktop, to the Start screen.) But since windowed mobile apps won't become available until Windows 9, those pinned apps will still run full-screen, as they do now, and obscure both the desktop and its taskbar.

Microsoft is also adding right-click context menus to the Metro environment to make it friendlier to mouse-equipped users on traditional PCs. It's not currently clear whether this capability is limited to the Start and Apps screens, or if it will work in Metro apps as well. But if you're familiar with how these interfaces work today, you know that right-clicking in Metro displays app bars that are more suitable for a multi-touch interface. So using context menus when a mouse is clicked will make the system more usable and familiar for those users.

Responding to somewhat shrill complaints about the new placement of power options (i.e., shutdown, sleep, and other settings) in Windows 8, Microsoft is also adding a prominent power button to the Start screen.

Microsoft is also utilizing a technology—which one unconfirmed source told me is called "wimboot"—to help decrease the amount of on-disk storage that's required by the OS. This is a big deal on today's modern Windows devices, which often ship with just 32GB or 64GB of SSD or similar storage, much of which is taken up by the OS installation, and, on many devices, by Office. But that same unconfirmed source told me that this disk savings will be only be offered on new PCs, and isn't something that can be added otherwise.

Windows 8.1 Update 1 will be finalized sometime in March and will be delivered via Windows Update, first as an optional update. I'm told that the broad public rollout will happen in early April.

Naturally, talk of an Update 1, combined with an understanding of how Microsoft updated Windows Phone 8 last year, leads naturally to talk about whether the firm will deliver further updates—Update 2, for example—between Update 1 and Windows 9. That's possible, of course. But multiple sources have told me that the OS group—like much of Microsoft—is currently at something of a standstill while they wait for the reorganization to complete and for the firm to select a new CEO. Put simply, there's a lot of uncertainty everywhere at Microsoft right now and questions about whether the current strategy will continue unchanged under new leadership.

Also unclear is what Windows Phone 8.1 Update 1 does to further Microsoft's aim of consolidating Windows and Windows Phone. We know that the firm intends to do just that over at least a few releases, and it's not hard to imagine Windows Phone and Windows RT merging in the future. Are there any hints of this change coming in Update 1?

It doesn't appear so. But Microsoft is also prepping a Windows Phone 8.1 release for the same basic time frame as Update 1—April 2014—and that release, allegedly, will begin that work.

Windows Phone 8.1

Much less is known about this next major update for Windows Phone, which is behind schedule despite an 18-month development window. In fact, Mr. Myerson pulled people off of Windows to help get Windows Phone 8.1 delivered in time for its April release. I'm told it's going to be close and that 8.1 is "coming in hot."

I'm told that Microsoft will announce it at the Build conference in April, but I'd be surprised if we didn't see some Windows Phone 8.1 news at Mobile World Congress in mid-February. We do know that existing phones running Windows Phone 8 are upgradeable, though of course we can likewise expect carriers to do what they can to limit those kinds of upgrades.

Beyond that, what we know about the expected Windows Phone 8.1 feature set is mostly rumor, at least from my perspective. There is a Siri/Google Now-like voice-control feature that's code-named Cortana (and should just be called Cortana), after a character in the "Halo" games. Microsoft will let hardware makers remove the three front-facing buttons—Back, Start, and Search—and use new software-based versions, as we see on Android. And many of the integrated experiences, or hubs, should be redesigned.

We also know that a so-called Enterprise Feature Pack (expect a name change) is coming to Windows Phone early this year, though it's not clear if this is tied to Windows Phone 8.1. This update will add features such as S/MIME email encryption support, an app-aware, auto-triggered VPN like the one in Windows 8.1, enterprise Wi-Fi support with EAP-TLS, certificate management, and enhanced Mobile Device Management (MDM) policies so you can lock down the phone in more granular ways than are possible with Exchange ActiveSync (EAS).

Why These Updates Matter

So Microsoft's update naming conventions have changed over the years: the service packs and feature packs of years past gave way to cumulative update rollups, general distribution releases (GDRs) and now these Update 1-type releases. So what? The servicing and updating of Windows has always been of interest and a challenge for those who need to manage those changes across multiple desktops, right? Well, yes. But two things are different now.

One, Microsoft would like to get its OSs—and other major products such as Office—to the point where they are essentially auto-updating all the time and doing so in a way that doesn't disrupt things even in highly managed environments. And two, for perhaps the first time ever, and certainly to this degree, forces external to Microsoft are driving this change.

Windows 8 itself was a reaction to the multi-touch and tablet-based personal computing world that Microsoft saw coming right around the time that Apple announced its first iPad. (I know, I know. You might argue that Windows 8—and Surface—is really just a reaction to the iPad, and while Microsoft claims otherwise, let's not quibble over the timing.)

And whether you love or loathe this new Windows, one point isn't debatable: Personal computing has absolutely changed in the ensuing years, with individuals turning to simpler and less complex devices. This trend will continue and accelerate.

As of the end of 2013, over 92 percent of all PCs sold ran Windows, and if that number sounds surprisingly familiar, well, you're right: Windows hasn't lost hold of this important market, ever. But PC sales have fallen. And in the emerging new market for personal computing, in which smart phones, tablets, PCs and PC-like devices must all be supported and counted as equals, Windows is no longer dominant.

In 2013, hardware makers shipped over 1 billion smart phones to customers, far more than the roughly 300 million PCs that shipped in the same time frame. 80 percent of those devices run Android, while 15 percent run Apple's iOS and only 4 percent or so utilize Windows Phone. Certainly, Microsoft's smart phone OS is seeing some success—it garnered over 10 percent market share in Europe last year, for example, and even outsells iPhone in some markets—but it's coming at the low-end of the market and there are questions about how well the Nokia transition will go.

Tablet sales, meanwhile, are growing, and hardware makers delivered 220 million of the devices in 2013. Tablet sales will exceed those of PCs as soon as this year. And Microsoft's share of this market, so far, is likewise nonexistent. By 2017, Windows is expected to command just 10 percent of the tablet market, compared to almost 60 percent for Android and 30 percent for Apple's iPad.

To manage the transition to the future, Microsoft will step up the development of mobile apps on competing platforms, but a key goal is to strengthen the performance of Windows in markets—such as smart phones and tablets—in which it doesn't currently compete very effectively. This means moving away from the monolithic, three-year development time that it undertook for Windows versions in the past.

Windows and Windows Phone today are imperfect, and ill-equipped for the markets in which they compete. So releases such as Windows Phone 8.1 and Windows 8.1 Update 1—as well as subsequent updates that keep current OS versions fresh and updated with new features—represent one way in which Microsoft can attempt to compete more effectively with its mobile OS competitors. So is listening to customers and offering user experiences that work well on each of these very different device types.

Put simply, the next couple of years are going to be very important for Windows. Although we might still get excited about the Big Bang releases, success now hinges on smaller, incremental updates. And on whether Microsoft's customers—especially the corporate base that makes up two-thirds of its business—accept these kinds of changes.