Microsoft's Plan to Sell Windows This Holiday Season

For this holiday season, Microsoft plans to right the Windows ship and to do so by selling it and the devices on which it runs in a new way. The goals are simple but specific: Sell 16 million Windows tablets over the holiday sales season while making touch mainstream on PCs and improving the Windows retail experience.

Here are the plans.

FY14 Holiday Campaign. With Windows 8, Microsoft sought to "reinvent" Windows. This year, with Windows 8.1, Microsoft seeks to reinvent how people perceive Windows. The focus is on new features in Windows 8.1 and a new array of tablets and other Windows devices that are shipping this holiday season.

Hard goals for the holiday season: Sell 16 million Windows tablets, make touch mainstream, and improve the Windows retail experience.

Why: "Worldwide, Windows share of retail devices continues to decline," Microsoft notes internally, consumer adoption of Windows 8 has been slower than expected, competitive tablets (specifically low-end Android) are capturing consumer share of wallet, customers are confused because of fragmented strategies with PC makers, the environment is complicated, and consumers are doing their own research online while retailer web sites have not evolved to help them.

Barriers: Windows 8 reviews were "mixed" and consumer perception is that it is too difficult to learn. Plus touch PC availability lagged the initial release. Consumers are confused that several OS versions—Windows 8, Windows RT, Windows 8.1, and even Windows 7—are all in the market at the same time. And the variety of PC and devices type choices can be "overwhelming," with touch/non-touch, tablet, detachable, laptop, convertible and All In One (AIO) choices.

Reinvent the Windows brand. Windows and Windows PCs are now perceived by consumers as being purely functional. The goal with Windows 8.1 and the "uniquely innovative" devices that run this system is to make the brand more aspirational. The mission: "Make the Windows experience a vital and loved part of people's lives." (The bad news: Aspirational is a term Microsoft first used with Windows Vista.)

The brand is Windows. As with Office, Microsoft will refer to Windows 8.1 as "the new Windows," and position it as an advance on the bold vision set forward with Windows 8.

Work with retailers to improve the retail experience. A big part of Microsoft's plans, of course, is to turn the PC aisle hell holes you see today in physical stores into clean, uncluttered and welcoming Windows centers. To this end, Microsoft has created store-within-a-store locations in Best Buy other premium retailers, and has provided other retailers with updated retail kits.

Store-within-a-store. The goal of store-within-a-store locations is to provide an "immersive educational experience to help drive Windows sales." The experience should feel like a premium, one-stop destination for consumers to learn everything about Windows 8.x devices and the related ecosystem.

Key Windows 8.1 features. Personalized Start screen, familiar desktop, first and third party apps, and the best user experience. Additionally, specific devices will push their own unique features.

Overall messaging theme. Windows is best for both work and play, in Microsoft's view. A Windows tablet is "more than an ordinary tablet," while a Windows PC is "the only PC with touch."

Push touch. In developed markets, consumers who buy specific Windows touch PCs and devices will receive a $25 gift card that can be used in the Windows, Windows Phone or Xbox online stores. Offer will be available from November 15 to December 28. Tagline is "Buy a Windows Touch PC and get $25 in apps."

Only 20 percent of PCs that ship during the holidays will come preinstalled with Windows 8.1. For this reason, Microsoft is providing retailers with a special USB-based Windows 8.1 Upgrade Kit that they can use to upgrade. Best Buy, Dixons, FNAC, and other retailers are getting this kit (as well as holiday Windows 8.1 demos). This suggests that Microsoft's schedule for Windows 8.1 wasn't exactly optimized for its partners.

Funding. Last fiscal year, Microsoft spent $241 million on its retail Windows efforts, but that will amount will jump to $405 million this year. $131 million of that is being spent on incentives and offers, while the remaining $274 million is on direct marketing and operating expenses.

Interesting stuff. Hopefully this holiday season will be a better experience than last year.