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Microsoft pins high hopes on radical shift with Windows 8

Brendan Mcdermid / Reuters

Microsoft CEO Steve Ballmer displays Windows 8 phones at an event in New York last month. Windows 8 is intended for desktop, laptops and tablet computers as well as phones.

Microsoft Corp. executives are pulling out all the stops to make sure their new Windows 8 operating system is a winner. They have little choice.

The touch-friendly operating system, which works on everything from desktop computers to smartphones, is the company’s Hail Mary play as it looks to regain an edge on Apple and other competitors that have outflanked the Redmond, Wash., company in recent years.

Microsoft starts selling Windows 8 on Friday. Years in the making, the new operating system replaces Windows’ familiar Start screen with a touchscreen-style interface of tiles that users swipe to launch programs. Microsoft also is launching the Surface, a stylishly slim tablet computer with optional, pressure-sensitive keyboard that the company hopes people will find more work-ready than the iPad.

Microsoft has mounted a major marketing push for both products, including TV commercials with happy Surface users clicking the tablet’s keyboard cover open and shut as they dance to a catchy, techno beat. On Tuesday, Microsoft officials staged an official Windows 8 unveiling at Shanghai’s 1933 Grand Theatre in conjunction with opening an online store in China. The company is even erecting a 160-foot New York City cityscape “art installation” in the Big Apple’s Hudson River Park as part of the promotional campaign.

Microsoft is banking on the launch of Windows 8 and related products to reverse a dip in worldwide PC sales some observers ascribe to pent-up demand for new devices as well as continued strong sales of the iPad and other tablets. That dip has hit Microsoft’s bottom line. Last week, the company reported quarterly earnings dropped 22 percent on an 8 percent decline in revenue.

To improve those results, Microsoft and its retail and device maker partners are targeting Windows 8 product launches for the start of the all-important holiday shopping season.

Early reports from some partners sound encouraging, though details are in short supply. At Best Buy, pre-orders for some of the 45 Windows 8 devices the company will start selling Friday “have been good and exceeded our expectations in certain areas,” says spokesman Jeff Haydock, though he declined to share specifics.

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Best Buy prepped for the anticipated holiday shopping onslaught by running employees through a combined 50,000 hours of training on the new OS. The electronics retailer is also offering customers hours of free video tutorials, plus a 24/7 “concierge” service for an additional fee through its Geek Squad division.

Dell started taking pre-orders Oct. 12 for at least eight Windows 8 devices, including the XPS 12 Convertible Ultrabook, which swivels to switch from tablet to laptop, and the Latitude 10, a 10-inch tablet targeted to business users. “Customer demand is high” for devices available for pre-order, says Fara Howard, North America consumer and small office marketing executive director, though she wouldn’t give specific numbers.

Dell will roll out more Windows 8 devices in the near future, Howard says. The company is using social media sites like Facebook and Twitter to reach its 10 million customers to answer questions about the new OS, which Howard termed “critically important to Dell, to the industry and to our customers.”

But it remains to be seen whether Corporate America and small businesses will leave behind older versions of the Windows OS for such a radical departure from the workplace status quo. “Business reaction to Windows 8 is what everyone is holding their breath on,” says Charles King, an IT industry analyst with Pund-IT, in Hayward, Calif.

Andre Preoteasa, information technology director at Castle Brands Inc., a New York liquor distributor, doesn’t plan to upgrade the Windows 7 and XP machines his company uses any time soon.

“It's far too different for even the computer literate user and would be too much trouble in a work environment,” he says. Besides that, Preoteasa is switching the 50-person company to more web-based software, which makes the question of what OS to use a moot point, he says.

Businesses that have clung to Windows XP will have to switch to something else eventually because Microsoft will stop supporting the older OS in two years. While some might upgrade to Windows 8, others could opt to “downgrade” to Windows 7 instead, says Mike Krieger, a tech industry market expert with ConStat Inc., in Oakland. “That’s what one of the big brokerage companies in San Francisco is doing,” he says.

The Windows 8 launch comes two days after Apple unveiled a much overhauled iMac, and the iPad Mini, a smaller version of its ubiquitous tablet computer.

Michelle V. Rafter is a Portland, Ore., writer covering technology and business.

CNBC's Jon Fortt talks with Steve Ballmer, CEO & Director of Microsoft, about the company's new product, and how it's "Surface" tablet is going to measure up against the competition.

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