Tami Reller Talks: Windows 8 at 16 Months

Since Steven Sinofsky left Microsoft in the wake of the Windows 8 release, Tami Reller has emerged as an interesting voice of transparency at the company. And while she has left her job in the Windows group as part of the firm's recent reorganization she did appear publicly again this past week to discuss the progress Microsoft has made updating what many feel to be the most poorly-received Windows version ever made.

It's been an interesting evolution, with the Politburo-style secrecy of the Sinofsky regime giving way to a more open approach. No, not the freewheeling "we do it all" approach of the Allchin years. But something in-between the two.

Reller's public appearances, likewise, have highlighted this revolution, both at Microsoft generally and with Windows 8 specifically. Here, we see Microsoft's public stance on Windows 8 change from exuberant to pragmatic over time, and the blame shift from the PC makers to the actual design of the software.

In November 2012, just after Microsoft shipped Windows 8, Reller spoke of "the tremendous buzz and interest" in a product that, at launch sales "roughly in-line" with those of Windows 7: 40 million units. She also criticized PC makers for not pushing touch hard enough, an issue that was never resolved in 2013.

In January 2013, Reller was back and using the same language: Again, Windows 8 sales were "roughly in-line" with those of Windows 7 with 60 million licenses sold. But she started admitting to some retail softness that I had previously reported: Yes, Windows 8 sales were lower than expected but that was because PC makers delivered the wrong types of devices, she claimed.

In February 2013, Reller talked about Windows 8's progress at 90 days but there was curiously no new license sales update. But the problems with PC makers had been "solved" and "customers [now now] find the devices they want on the [store] shelf."

And then there was May 2013, when Reller finally started talking about Windows 8 "Blue," which became Windows 8.1. "Blue continues the Windows 8 vision," she said. The update would "address customer feedback" about Windows 8, much of which was negative. She never mentioned sales figures, nor compared Windows 8 to Windows 7. And she promised more of a variety of PC types by holiday 2013, which pretty much happened. It didn't help: Windows 8 license sales have fallen over time.

And now we have Reller's most recent appearance, again at a Goldman Sachs tech conference. She revealed that Microsoft had sold 200 million licenses to Windows 8 in 16 months, well below the sales rate for Windows 7 and providing the proof to that slowing over time claim. And despite reports to the contrary, she said absolutely nothing about Microsoft reconsidering Office for iPad.

So what did she really say this week?

Nothing truly new, though she did corroborate a lot of information Microsoft insiders have been discussing around Windows 8.1 Update 1. To the broader world, however, these comments must have seemed very vague and high level. And I think it's important to understand that this is both proper and to be expected, given that Reller runs Microsoft's broader marketing efforts now.

So let's parse the important bits, with regards to Windows specifically. You can find the full transcript of her recent appearance on Microsoft's web site if you're interested in the less than important bits. I'll put the two most important bits up top and then proceed mostly linearly through the transcript.

Windows 8 license sales are "stunning". "We surpassed 200 million licenses now on Windows 8, which is pretty stunning," she said. "A lot of traction and yet a lot more work to do."

Key to future success? Differentiation. And how does Windows differentiate from the Mac, iOS, Android and Chrome OS? The "full Windows experience," as she called it, runs full Office, for starters. "Part of that [differentiation] is Office, for sure," she said. "So how do we drive differentiation there and sort of what experiences, cross-platform, are important in that differentiation?  Is it [Office] Web Apps, or is it something different?" You tell us, Tami.

The new Microsoft CEO. Many sources in the Windows organization have told me that they were in a holding pattern while Microsoft went about its CEO search and that there were no plans to deliver anything between Windows 8.1 Update 1 and Windows 9. That could be changing now that Satya Nadella has been selected as the CEO. "That day, we were back to business," she said. "Now it's about execution."

How Nokia will impact Microsoft and its devices aims. "We need to do the integration of Nokia very, very well," she said. "We have to ... really look to accelerate." She noted that Windows Phone was the "clear third ecosystem spot," though it's important to remember how far behind the top 2 they are with less than 4 percent worldwide market share.

How Nokia will impact Windows. This is an interesting view. "For Windows to be successful we need to be successful in the mobile space broadly and that's phones and that's tablets," she said. Those are two areas where Microsoft is not even remotely successful, so it's something to watch obviously. Reller reiterated Steve Ballmer's remorse that the company didn't jump on the modern mobile bandwagon early enough.

Microsoft's customer segments. Bolstering reports from the recent financial results that Microsoft is basically only successful with business customers, Reller noted that Microsoft is "world class" when it comes to engaging enterprises, but there are "lots of places to improve." She says Microsoft needs to "execute better" to become "world class" on the consumer side. This will take two forms, incremental progress each quarter but also bigger steps that need to be taken. "We just need to deliver a more consistent end-to-end engagement with consumers," she said. "We're very, very focused on ... the whole experience."

Windows RT. With PC makers abandoning Windows RT and adopting Chrome OS in droves, one might think there would be some reconsideration going on there. But Reller says Microsoft is "very, very pleased" with the reception to Surface 2, which runs Windows RT, which has garnered very high customer satisfaction scores.

Windows RT + Windows Phone? Many people, myself included, have reported that Microsoft intends to merge Windows RT and Windows Phone over time. Any hint of that? "Terry Myerson and the OS group are really looking at how we make sure we've got a world-class mobile operating system moving forward, and what will that mean for our tablet and mobile strategy," she said. "I think there's a lot of opportunities to do some things there that take that forward in an interesting way."

A family of devices. We've seen a bit of this already, but Microsoft will expand its consumer marketing efforts to push the family of Windows products that it and its partners now offer. "If you're choosing a family of devices from the Windows family, ... you can expect a consistent experience," she said. "And here's how that experience is differentiated ... We can really highlight and romance some specific differentiation or talk about the whole experience, or to be able to highlight a specific device.  But, again, it all goes back to this concept of a family of devices. That's where you'll see us put the majority of our muscle on the consumer side."

Moving from blaming the PC makers to meeting their needs. I reported in the past that Microsoft blamed PC makers for not delivering the right machines to market, and that Reller outright blamed Windows 8's initial slow uptick (since even slower) on this issue. Now, she speaks of actually meeting the needs of PC makers, suggesting that the initial release of this software did not. "We have listened [to the PC makers] and we have moved as fast as humanly possible to [make the changes they requested]," she said. "And a lot of that is just happening now this spring."

Smaller storage footprint. That previous quote is clearly a reference to Update 1, which will allow PC makers to deliver Windows 8.1 with a much smaller storage footprint, answering key customer complaints about Windows bloat. "[We want] to make it easy for [PC makers] to build the types of devices on Windows that they want to build and be able to deliver those devices at the price points that they want to take them to the marketplace," she said. The technical changes are nice, but it sounds like lower-cost Windows licensing is in order too.

Smaller devices too. With the current spate of mini-tablets hitting the market, it's not just the storage space that's smaller. Everything is smaller. And Windows needs to adapt to that, too. "A high priority of our development effort is to make sure that Windows is ... right-sized for those devices," she said. "That is absolutely a high priority ... We've now got more things coming just around the corner, and so you'll see us do that." Update 1, obviously. "We will make a material movement forward on just the footprint of the OS and what that can mean for how we run on smaller devices."