Windows 8 Marks Fightback From Microsoft

Microsoft (NasdaqGS: MSFT - news) is unveiling a dramatic overhaul of its Windows operating system - with the latest version being designed to run on all computers from desktops to tablets.

Windows 8 represents the biggest change to the industry's dominant operating system in 17 years.

The new operating system also marks the first time that Microsoft has made touch-screen control the top priority, although the system can still be switched into the familiar desktop mode that allows for control by keyboard and mouse.

CEO Steve Ballmer sees Windows 8 as the catalyst for a new era at Microsoft.

He wants the operating system to ensure the company plays an integral role on all the important screens in people's lives - PCs, smartphones, tablets and televisions.

"We are trying to re-imagine the world from the ground up with Windows 8," Mr Ballmer told The Seattle Times ahead of today's official launch.

Early reaction has been mixed. Some reviewers like the way the system greets users with a mosaic of tiles displaying applications instead of relying on the desktop icons that served as the welcome mat for years.

But its critics say it is a confusing jumble that will frustrate users accustomed to the older versions, particularly when they switch to desktop mode and do not see the familiar "Start" button and menu.

Windows 8 will hit the market backed by an estimated $1bn (£620m) marketing campaign. The advertising frenzy is just one measure of how important Windows 8 is to Microsoft's future.

Analysts say Mr Ballmer's margin for error is slim after being consistently outpaced by Apple (NasdaqGS: AAPL - news) and Google (NasdaqGS: GOOG - news) in his nearly 13 years as CEO.

During his tenure, Microsoft's stock has lost nearly half its value, wiping out more than $200bn (£124bn) in shareholder wealth.

The biggest question hovering over Windows 8 is whether it is innovative and elegant enough to lure consumers who are increasingly fond of smartphones, tablets and other sleek gadgets.

Those mobile devices have been setting industry standards while Microsoft engineers have spent two years designing a new operating system.

"It doesn't seem like Microsoft is really pushing consumers into the future with Windows 8," said Forrester Research (NasdaqGS: FORR - news) analyst Sarah Rotman Epps.

"What Microsoft has done is like buying a pair of shoes for a kid. The shoes may fit exactly right today, but those shoes probably won't fit six months from now."

The signs of decay have been proliferating since Apple released the iPad in 2010, hatching a tablet computer market that has combined with an already vibrant smartphone market to siphon away technology spending that used to go toward the latest desktop or laptop PCs.

Worldwide PC sales are expected to decline this year for the first time since 2001, according to research firm ISH iSuppli.

It is a drop of just 1%, but underscores a troubling trend that has been hurting Microsoft.