Surprise! Microsoft jumps to Windows 10

Forget Windows 9. In an unexpected twist, Microsoft will be going straight to double digits from Windows 8 as it faces a challenging future for its operating system.

Microsoft just said no to 9. The follow-on to the current Windows 8 operating system will be known as Windows 10.

Originally codenamed Windows Threshold, the new operating system essentially does away with the dependency on the tiled "Metro" user interface that Microsoft had attempted to implement across its entire device line, from desktop PCs to Surface tablets and Windows Phone devices. In its place is a combination of the so-called live tiles, present in areas like the new Start Menu, and a more classic Windows experience that aims to please both touch and keyboard-and-mouse users.

Windows 10 is such a substantial leap, according to Microsoft's executive VP of operating systems, Terry Myerson, that the company decided it would be best to skip over Windows 9, the widely expected name for the next version.

Microsoft has spent the better part of two years, since Windows 8's debut in October 2012, responding to criticism over the direction in which it took the operating system that has long dominated traditional PCs. Windows 8 introduced the touch-prioritized Metro design with live tiles and removed key elements of Windows 7, disrupting the familiar look and feel for long-time Windows users. The changes were representative of an overall acceleration of Microsoft's unification of its touch-enabled mobile devices with its desktop and laptop software.

Those changes found many critics and detractors.

Windows 8.1, released last year, attempted to address those complaints with the revival of core Windows design and usage properties, such as the Start button. Now, with Windows 10, Microsoft is not quite hitting the reset button on touch, but wants to make sure it does not repeat history in its attempt to take Windows forward.

"We believe that, together with the feedback you provide us, we can build a product that all of our customers will love," Myerson said. "It will be our most open collaborative OS project ever."

Taking the stage after Myerson's introduction was Microsoft's Joe Belfiore, corporate vice president of operating systems and the current public face of Windows and Windows Phone design and development. He gave attendees a live demo of an early build of Windows 10. Belfiore, too, put the emphasis on a great leap forward.

"We want all these Windows 7 users to have the sentiment that yesterday they were driving a first-generation Prius," he said, "and now with Windows 10 it's like we got them a Tesla."

Windows 10 combines elements of Windows 8's forward-thinking design and the familiarity and functionality of Windows 7, still the most popular Microsoft OS. According to Web traffic-tracking firm Net Applications, Windows 7 could be found on 51 percent of desktop PCs in August, compared with just over 13 percent for versions 8 and 8.1 combined.

"It's easy to say, 'Oh it's Microsoft giving up on touch,'" Belfiore said, pointing out the most obvious criticism of the scaled-back Metro interface. "We're absolutely not giving up on touch. We have a massive number of users who know Windows 7 well and a massive, but smaller, number of people who know Windows 8 well."

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When it comes to digital games, Microsoft's not playing around

Many on Wall Street thought Microsoft ought to exit the game business, but since taking over as CEO, Satya Nadella has taken the opposite tack. Here's why.

Long before Microsoft announced Steve Ballmer's replacement, some on Wall Street were already advising the incoming CEO to dump the company's Xbox business.

"Microsoft is trying to do too much, and these assets add no clear value to the overall business," Nomura's Rick Sherlund said at the time. He sounded a view that was popular in some financial circles that gaming was at best a sideshow, at worst a distraction. Microsoft would serve shareholders far better by focusing on its bread-and-butter enterprise business, many reasoned.

But Microsoft had other ideas.

"Gaming is a top activity spanning devices, from PCs and consoles to tablets and mobile, with billions of hours spent each year," CEO Satya Nadella said in a statement on Monday after the company confirmed its $2.5 billion purchase of Mojang AB, the Swedish makers of Minecraft.

"Minecraft is more than a great game franchise -- it is an open world platform, driven by a vibrant community we care deeply about," Nadella said.

Nadella's PR handlers must have had to arm-wrestle their boss not to add his now-signature "mobile-first, cloud-first" mantra into the press release, but the line wouldn't have been out of place with the worldview he has repeatedly articulated since his appointment as chief executive last February.

Nadella also sees what he describes as the "digital life category" as strategically important to Microsoft. In his -- July letter to employees, he talked at length about the technology benefits "flowing from our gaming efforts into our productivity efforts -- core graphics and NUI in Windows, speech recognition in Skype, camera technology in Kinect for Windows, Azure cloud enhancements for GPU simulation and many more." At the time, it was all about Xbox. Now Microsoft is adding a much-coveted property that ranks asthe third best-selling game of all time behind Tetris and Wii Sports -- for the price of a veritable rounding era. Microsoft, which ended the June quarter with some $86 billion of cash on the balance sheet, also gets a Trojan Horse that it will presumably use to introduce younger people to more Microsoft products other than Xbox.

Until now, Minecraft has not been available on Windows Phone. That's obviously going to change as Microsoft seeks to become a more important player in the mobile game business, both for smartphones and tablets. No doubt, Microsoft's keen on getting more people to use its mobile hardware products. And if Minecraft introduces enough users to the panoply of higher-margin software products that Microsoft sells, such as Office 365, then Nadella will have the last word in the argument. For the record, Microsoft expects the acquisition to be break-even sometime in its fiscal 2015 year.

Could Microsoft still screw this up? Sure. And the departure of co-founders Markus "Notch" Persson, Carl Manneh, and Jakob PorsÈr once the deal closes means it's going to be up to Xbox boss Microsoft's Phil Spencer to manage the transition successfully. For now, he's saying all the right things about supporting the Minecraft franchise across platforms -- including iOS, Android and PlayStation, in addition to Xbox and PC. (Minecraft is available on Xbox One.)

But Microsoft is getting the Minecraft franchise and little more. In a note commenting on the deal, Cowen and Company's Gregg Moskowitz wrote that there's no sign that other potential hits are in Mojang's product pipeline. In other words, Microsoft appears to be buying the game and 40 developers, but effectively nothing else.

Microsoft to Reveal Windows 9 on September 30

Microsoft's follow-up to Windows 8 could make its debut as early as next month, according to reports.

The Verge, citing unnamed sources familiar with Microsoft's plans, reported today that the software giant is gearing up to unveil the updated operating system at a special press event tentatively scheduled for Sept. 30. That information corroborates a recent ZDNet report from veteran Microsoft watcher Mary Jo Foley claiming that Microsoft is planning to preview a new version of Windows by late September or early October.

Previous rumors indicated that the OS - codenamed Threshold but likely to be named Windows 9 - was being developed as part of Redmond's "One Windows" strategy and slated for release in the first half of 2015.

For its part, Microsoft is keeping tight-lipped on the matter. The company has not made any public statements about the next version of Windows. When contacted by PCMag on Thursday, a Microsoft spokesperson declined to comment on the reports, saying "We have nothing to share."

Meanwhile, recent rumors indicate that the successor to Windows 8 will reintroduce the Start menu and further chip away at differences between Redmond's flagship PC platform and the software running the Xbox One and Windows phones. Other rumored changes include: Metro-Style applications on the desktop, virtual desktop functionality, and Cortana integration, according to ZDNet.

For more, check out PCMag's review of Microsoft Windows 8.1 Update.