Programming Windows: Aftermath (Premium)

The fallout from Windows 8 was immediate. Steven Sinofsky, who had done more to harm Windows than any of Microsoft’s competitors, was summarily fired by CEO Steve Ballmer. And two of his underlings, Julie Larson-Green and Tami Reller, were tasked with fixing the product as quickly as possible. This would be a temporary situation, almost a punishment, and it was telling that neither was given Sinofsky’s title or overall responsibilities: Ballmer clearly wasn’t sure this was the right direction.

The public’s reaction to Windows 8 was a mixture of confusion and outrage. As originally designed, Windows 8 didn’t just embrace a touch-first mobile world, it jammed it down users’ throats whether they wanted it or not. And most users, decidedly, did not. With Windows 8, Microsoft seemed to be abandoning the billion-plus people who expected Windows to look and work a certain way. Meaning, the way it always had.

Power users were particularly put out, complaining that the Start screen, Windows Store, and Windows Runtime-base full-screen apps together constituted a childish, Fisher Price-like environment that had been grafted onto the more traditional and powerful Windows desktop like some bizarre Frankenstein experiment. Worse, these unwelcome additions neatly hid some useful desktop upgrades that collectively provided the same leap over Windows 7 that Windows 7 had made over Windows Vista.

But Windows 8 succeeded in harming mainstream Windows users—the vast majority of the userbase—the most.

The system booted into a full-screen Start experience that bore no resemblance to the Windows versions they had always used, and many of its key new interfaces were undiscoverable and, when found, unpolished. And even those who figured out how to navigate to Windows 8’s more familiar desktop environment faced uncertainty: there was no Start button for the first time in almost 20 years, and no way to bring the traditional Start menu back. Complaints began piling up immediately with Microsoft and its PC maker partners from both consumers and business users. Many customers demanded to go back to Windows 7.

“Windows 8 is the biggest and most confusing upgrade that Microsoft has ever wrought on its most core of platforms,” I wrote at the time. “It is a mess. A glorious, wonderful mess … It is the most controversial release of Windows ever, eclipsing previous perceived disasters like Windows Vista and Windows Me.”

“I have a hard time believing that any normal person—that is, any non-enthusiast—would want to, or should, go through the time, effort, and potential disaster of upgrading a perfectly good Windows 7-based PC to Windows 8,” I continued. “Windows 8 is for devices. It’s not really for PCs.”

Externally, Microsoft put on a brave face, though it knew before the Windows 8 launch that this product was doomed and would need to be quickly fixed to appease its partners and customers. But the first external hints at change came quickly: just days after the Windows 8 launch, starting on October 30, 2012, Microsoft held its Build 2012 developer conference. This show was notable for two reasons. It was the first and only Build to be held at Microsoft’s corporate headquarter in Redmond, Washington. (Which turned out to be a huge mistake when torrential rain almost washed away the tents the software giant had erected on its campus to hold the attendees.) And Steven Sinofsky was nowhere to be found.

Instead, it was Steve Ballmer that greeted the drenched developer audience.

Windows 8 was off to a “spectacular” start, he lied, after a few opening remarks about the crazy weather and promising that future shows would be held in a bigger—and drier—place. Microsoft had sold 4 million Windows 8 upgrades in just 3 days, though he admitted there wasn’t a lot of data yet, and that many of those upgrades were in fact boxes that retailers had ordered that were still sitting on shelves.

Microsoft had additionally sold “tens of millions of units” to its corporate customers, he said. But here, too, he admitted an inconvenient truth: all of them could, and most of them would, use those licenses to install Windows 7, not Windows 8. They were free to upgrade to Windows 8 on their own schedules, as always. And most would not.

Incredibly, he continued to imply that Windows 8 wasn’t really doing all that spectacularly after all. When Microsoft probed its retailer and PC maker partners for feedback it could share, all that it got in return were vague proclamations that didn’t amount to anything at all. One British retailer told Microsoft that Windows 8 laptop and tablet sales were better than expected without communicating what its expectations had been, for example.

Even the industry publication quotes Ballmer provided in the keynote were a mixed bag. Two of the four were indeed complimentary (though one of those was about Surface, not Windows 8), but the other two—“10 reasons to embrace Windows 8 now” and “Windows 8 to bridge gap between PC, mobile devices”—were not even from reviews, and one was just a short tweet.

In a final spasm of denial, Ballmer then described the three biggest events he had lived through at Microsoft since he arrived at the company in 1980: the original IBM PC, Windows 95, and, yep, Windows 8. It was a time of opportunity, he said, for both Microsoft and the developers sitting there in the room.

Where previous Windows events had been team efforts—even Sinofsky had shared the stage—the opening Build 2012 keynote started off as a one-man affair, with Ballmer manning demos by himself across different hardware devices. In some ways, this was impressive. After all, what other CEO knew that much about such a diverse array of products and services? But it also felt empty and weird. Where were the people who had made Windows 8? Where were the developer voices from inside the company?

After an hour, Ballmer did finally cede the stage to other Microsoft executives, but only briefly, and not to the usual cadre of Sinofsky lieutenants. Instead of the awkward Larson-Green, Microsoft corporate vice president Steve “Guggs” Guggenheimer appeared briefly to confidently talk up first- and third-party apps and games that had been created for Windows 8.

And then instead of Antoine Leblond, Director of Program Management Kevin Gallo showed up to discuss Windows Phone 8 and how it now shared some of its core architecture with Windows for the first time, enabling developers to—somewhat laboriously—write apps that could run across both PCs and phones. (Windows Phone 8, like Windows 8, had launched just before Build 2012.) Gallo kicked off a live coding segment, but like the Leblond demos from past shows, the code was all prewritten and was copied and pasted in.

Why Microsoft planned such a show at that time remains unclear. Build was the successor to Microsoft’s decades-old Professional Developers Conference (PDC), a show that Microsoft co-founder Bill Gates had explained was only held when the firm had new platform innovations to share. But Build was yet another Steven Sinofsky power play: he had previously wrested control of the Windows developer platform away from DevDiv, and with Build, he had taken control of the developer messaging too. The reimagined Build, unlike PDC, would be held every year, and that was true whether Microsoft had anything new to share or not.

In 2012, it did not. And so that second Build conference was most notable for giveaways: Microsoft provided attendees a Surface RT tablet and Touch Cover, a Nokia Lumia 920 smartphone, and 100 GB of free SkyDrive storage to make up for the lack of news or excitement.

By mid-November, the public learned that Sinofsky was “stepping down” from his role at Microsoft and leaving the company, leading to innumerable questions about the future. (The opening segment of that week’s episode of Windows Weekly is worth watching for our hot take on this.) But we eventually learned that Sinofsky was forced out because of his divisive internal politics and overreach: when it became clear that Windows 8 was going to be a disaster, it was suddenly no longer acceptable that he had alienated half of the company. And when he demanded to add Windows Phone and the Developer Division to his growing empire, that was the last straw, as the senior leaders in both organizations would have left the company in protest.

Sinofsky, of course, positioned his exit as his “personal and private choice.” This was a lie, as was his assertion in the comments of a blog that he had never “initiated” his plot to take control of Windows Phone and DevDiv. As always, Sinofsky used tortured language to hide the truth: he was going to be let go, but was given the opportunity to step down, which would be better PR for both him and the company, so that became his choice. And it made sense to put Windows and Windows Phone under the same leadership. Just not his leadership.

Not surprisingly, there were those, inside and outside of Microsoft, who decried this sudden change. But there were many more who celebrated. My take was simple enough: I didn’t think Sinofsky’s run would end so close to the release of Windows 8, but I always knew he would end badly. As he did.

The other key players in the Windows 8 disaster were given a brief reprieve during which they could assist in fixing the product before the division was transitioned to new leadership and they were no longer needed. And today, there is only one major figure from Sinofsky’s regime—Panos Panay—who remains at Microsoft.

Just days after Sinofsky’s sudden exit, I received some internal Microsoft documents showing that sales of Windows 8 PCs were “disappointing” and well below the company’s expectations. Oddly, Microsoft blamed its PC maker partners and not the divisive design of Windows 8 for the shortfall. The theory was that PC makers didn’t embrace the new touch-first and mobile-oriented interfaces in Windows 8 and had skewed their offerings towards more traditional form factors rather than the tablets and 2-in-1s that Microsoft preferred. But that was a ridiculous assertion that Sinofsky’s group had used to justify the creation of Surface, Microsoft’s own PC lineup.

To the outside world, however, it was obvious why Windows 8 was failing. Industry analysts described the Windows 8 launch as “lackluster” and “disappointing,” with a Deutsche Bank research note predicting that “Windows 8 will have a more muted impact than prior [releases] [because] Windows 8 orders are much lower than PC makers originally expected a few months ago.” “Windows 8 is being run by less than a fifth as many people as ran Windows 7 in the same months before its debut,” Computerworld added.

Also in mid-November, Jensen Harris, then the Director of Program Management for the Windows User Experience Team, a person with no design background who had received degrees in music composition, defended the design of Windows 8 during a presentation at UX Week.

“Resting on [the] familiar is the way to mediocrity,” he claimed in making his argument for shaking things up. His point was that while each Windows revision had been familiar to users since Windows 95, people would be willing to change if you gave them something better. He cited many examples of such change—including the Nintendo Wii, the Apple iPhone, and Toyota Prius—but never acknowledged that those solutions had been better than what they replaced. Windows 8 was just different and weird, a major change with no clear rationalization.

“Dictating what customers want worked for Apple for many years because Steve Jobs was a design savant and because the consumer market has starkly different concerns than the business market,” I wrote at the time. “Apple’s products have also historically done a few things really well, not a lot of things half-heartedly. Microsoft is no Apple. Sorry.”

With the bad news mounting and no succession plan in sight, Microsoft started playing defense. In late November, Tami Reller spoke at a Credit Suisse annual tech conference, where she claimed that Microsoft had sold 40 million Windows 8 licenses, on par with Windows 7 in a similar time period. That sounded good, but it didn’t tell the full story. For starters, that figure included deferred license sales from the summer time period. And more pointedly, Microsoft had expected the figure to be much higher. We also soon learned that while Windows 7 had been installed on 83 percent of PCs in its launch month, Windows 8 was only on 58 percent; the market had gotten bigger, but the popularity of Windows 8 was lower.

It’s also worth pointing out that Microsoft had made the Windows 8 upgrade available at a much lower price than was the case with Windows 7, in an effort to bump up sales. Windows 7 PC owners could for a limited time get Windows 8 for just $15, making it the least expensive version of Windows that Microsoft had ever sold. And the retail upgrades were less than half the cost of those of Windows 7.

Amazingly, Reller implicitly confirmed that the software giant was unhappy with the PC designs its partners had offered for the launch.

“It will take a few selling seasons to get sort of all the designs we all like into the marketplace,” she said. “If you go into retail today, you will see some great touch devices, whether it’s touch laptops, or whether it’s a tablet or two with Windows 8 or Windows RT. It’s not enough in our opinion. I mean, we think the pipeline is great, and we’re excited to see that pipeline come into retail. And they are coming. And so our [PC maker partners] are doing great work, and we’ll see that come in over the next several months. Some you’ll see in December, some it will take longer. But I think it’s good, but not great in terms of the full touch assortment.”

She also addressed her colleagues, past and present.

“I will miss Steven,” she said of Mr. Sinofsky. “I will miss working with him on a daily basis. And one of his strong philosophies is that any organization and any system that has to deliver something as big as Windows absolutely needs to be able to live past any one leader, or really any one small set of leaders. And so that philosophy is really part of the DNA of the organization. And we have the benefit of such a strong leadership team and oftentimes in Windows, you really only get to see a few visible senior leaders, but the reality is, not only are those senior leaders very strong, but the bench of senior leaders that represent the product holistically.”

“Julie has such an ability to not only set a vision for the product, but just to be able to carry on the collaboration that really was such a key part of Windows 8,” she said of Julie Larson Green. That bit was crazy given the Sinofsky regime’s inability to work collaboratively with any other groups at Microsoft and should be viewed as damage control.

“I mean, think about Windows 8 and what we were able to bring together from assets across the company, whether it was the work that we did in Office to make that a key part of the Windows RT value proposition, whether it was Xbox and just how integrated that is,” she continued. “And the concept of being able to have the Xbox service just fully integrated in, whether it’s music or video into the Windows 8 experience, Xbox Smart Glass if you haven’t checked that out that’s a great app. And Bing, I can go on and on. There is so much we were able to accomplish, and we just see the possibility that that presents to consumers, and we just want to keep that going, and Julie and the team will be able to do that.”

Reller made headlines again in January 2013, when she revealed that Microsoft had now sold 60 million Windows 8 licenses, in line with Windows 7 during the same period of time. But this figure, too, was inflated: it included “sell-in to OEMs for new PCs,” meaning that many of those Windows 8 units were sitting on as-yet-unsold PCs. As for businesses, Windows 8 licenses could, of course, be used to install Windows 7, and were.

“We feel good about what we have been able to accomplish with the ecosystem,” she claimed. “[There is] still much more, so much more opportunity ahead, but certainly looking back we’re pleased with what we were able to accomplish with the project, and what we were able to accomplish with the ecosystem heading into launch, and in this first selling season.”

“We all had a strong sense that unique touch devices, particularly touch laptops and tablets, convertibles would be in high demand,” she continued, blaming the PC maker partners yet again. “The level of demand I think surprised a lot of people. And frankly, the supply was too short. I mean, there was more demand than there was supply in the types of devices that our customers had the most demand for.”

By this point, rumors had appeared that there was a coming Windows 8 update codenamed “Blue,” and Reller implicitly confirmed that without naming the update.

“The team is focused on really avoiding distractions and just getting set up to drive things forward,” she said. “It’s a team that is used to delivering very, very big, complex projects together and in working across Microsoft to bring teams together … They have proven success in delivering projects together … we are moving forward and did move forward fast after the change [in leadership when Steven Sinofsky left]. [After] a day of distraction [when Sinofsky abruptly left], people went back to the project that they’re working on, which we won’t talk about that today.”

Microsoft confirmed the 60 million licenses figure when it announced its holiday quarter earnings results in late January 2013.

“Our big, bold ambition to reimagine Windows as well as launch Surface and Windows Phone 8 has sparked growing enthusiasm with our customers and unprecedented opportunity and creativity with our partners and developers,” Mr. Ballmer said. “With new Windows devices, including Surface Pro, and the new Office [2013] on the horizon, we’ll continue to drive excitement for the Windows ecosystem and deliver our software through devices and services people love and businesses need.”

Microsoft’s Windows division posted revenues of $5.88 billion in the quarter, a gain of 24 percent year-over-year. But that figure included deferred revenue; without that, the gain was just 11 percent.

In February, Microsoft’s low-cost Windows Upgrade Offer, which let any Windows 7 user upgrade to Windows 8 for just $14.99, expired. Going forward, upgrades would normalize to $129 for Windows 8 (Core) and $199 for Windows 8 Pro. By that point, Windows 8 accounted for just 2.8 percent of all OS usage worldwide, compared to 45 percent for Windows 7 and 39 percent for the surprisingly resilient Windows XP. But even Windows Vista, with 5 percent, had more users.

In late March, we finally got our first illicit peek at “Blue,” build 9364, thanks to a leak. (The final build of Windows 8 was build 9200.) It was, I observed, a combination feature pack/service pack that added both new features and bug fixes. Unfortunately, most of the new features seemed aimed at reducing reliance on the classic desktop: Microsoft had added far more options to PC Settings, the Metro-style replacement for Control Panel, and there were new Metro apps like Alarms, Calculate (later Calculator), Sound Recorder, and Movie Moments.

“Microsoft is making important changes to Metro to make it a more complete and mature environment,” I wrote at the time. “The Start screen is gaining additional tile sizes, a virtually unlimited number of background and accent color combinations (compared to just 25 in Windows 8 RTM), and in-line (or ‘in-context’) customization capabilities that don’t require you to know about and find obtuse PC Settings interfaces in order to make changes to the thing you’re currently using … they make their Windows 8 equivalents look like a Fisher Price activity center by comparison. That’s a big deal.”

By April, it was clear that Microsoft was presiding over a market collapse: PC sales fell 12.5 percent in the first quarter of 2013, to 77.75 million units, and Gartner and IDC both blamed Windows 8. It was the first time PC sales had fallen in the fourth quarter in five years.

“The Windows 8 launch not only failed to provide a positive boost to the PC market, but it appears to have slowed the market,” IDC vice president Bob O’Donnell observed, citing its unfamiliar new UI and the costs associated with adding touch to PCs. As for Windows 8, license sales had hit just 90 million by the end of the quarter, a drop of 5 percent. Windows 7’s monthly run rate of 20 million units was over.

And when Microsoft released its next quarterly earnings update later that month, it failed to provide an update on Windows 8 license sales, a troubling sign. Windows Division revenues were flat, year-over-year, and Microsoft was now promoting a new avenue of success for Windows 8: mini-tablets. These “small devices powered by Windows” would appear in the coming holiday quarter, meaning that they would likely be powered by Blue, not the original release of Windows 8.

Several sources confirmed to me that month that Microsoft would also take the bold step of bringing the Start button—but not the Start menu—back to Windows 8 in the Blue update. This was based on user feedback, but the firm would be forced to later bring back the Start menu as well. I suggested, jokingly, at the time that perhaps Microsoft should brand Blue as Windows 7.8.

In late April, we received two more leaked Blue builds that confirmed that Windows 8.1, as it was now called, would provide a Start button on the desktop. These builds also included a kiosk mode, a modern (Metro-style) Files app, deeper SkyDrive integration (including on Windows RT 8.1), a new All Apps button, an improved All Apps screen with groups, improvements to PC Settings, and more settings to sync.

In early May, Microsoft’s Julie Larson-Green made a rare public appearance to discuss Windows 8.1 at the WIRED Business Conference 2013. Her performance was terrible, even for her.

“Whenever you make a change to Windows, there is always someone who has an opinion, either positive or negative,” she said when asked about “haters.” “So we knew there was going to be controversy around some of the things that we did. Even in Windows 7, we made small changes to the Start menu and taskbar and we have heard a lot about those changes even though they were relatively minor. So we knew when we made a change as big as Windows 8 that we were going to hear a broad spectrum. In fact, we had tested Windows 8 before we shipped for 1.2 billion user hours all over the world. And so I don’t think there’s anything I haven’t heard, before we shipped, since we shipped, and we’ve been following very closely, we get millions and millions of customer feedback every day, we read all the blogs, and there’s definitely a spectrum of, of … people. The more … we believe in people’s ability to learn and people’s ability to change. Sometimes it’s more of a problem for some people than others. We knew there would be a learning curve with Windows 8. We were prepared for that.”

This was an incredible acknowledgment. Microsoft received 1.2 billion user hours of feedback, got numerous complaints about the Windows 8 user interface, and … just ignored it.

“There have been discussions … meaningful discussions,” she answered when asked about the possibility of Microsoft bringing back the Start button. “But we believe fully in the Start screen and the model of having these live tiles. The [old] Start menu was never really built for multiple applications … the Start screen offers dramatic improvement. Windows today is so much more than launching applications … the [old] Start menu is not the be-all, end-all. [But] the button might be helpful to have on the screen. We’re principled in the direction we’re heading, but we’re not going to be stubborn … It’s not to spite you.”

Then she laughed as if she had something funny.

“[Blue is[ the next update to Windows,” she then confirmed. “And so I would say it’s really more about, um, continuous improvement, and the journey we’re on is one of continuous improvement, and we’ve made, you know [she waved her hands like a magician], 739 … fixes to Windows [8] since we shipped it, firmware updates, battery life improvements on Surface of over 20 percent from when you bought it in December, so we’re not just on the [she made a chopping motion with her hands] ‘big release’ cadence, we’re constantly improving with major updates to the apps, major updates to the product … [drifts off, nods head as if agreeing with herself].”

“There aren’t major changes [in Blue], some things are wildly inaccurately reported [she then flipped her hand, fan-like, in the air], some things are wildly accurately reported [she flipped her hand again], so somewhere in the middle [again with the flipping of hands],” she continued. “We’re working hard on … enabling new kinds of hardware and new kinds of software and doing some innovations in the product, continuing on the things we started and responding to customer feedback.”

And then the incredible happened. The pontificating Wired host, despite all of Larson-Green’s mumbling and bumbling, asked this incompetent person whether she would be interested in being the next CEO of Microsoft.

“Oh man,” she started. “I wouldn’t rule it out. I’m not in a hurry for anything like that. I’m new into my current role. Give me a year and then ask me again.”

Sidenote: Within 9 months, Larson-Green would be punted out of the Windows division amid leadership and strategy changes, and, after floundering in obscurity for two years, she would finally exit the company for good.

In May, another Windows 8.1 build, 9385, leaked, with more changes and improvements. And this time, some of them impacted the desktop: a new automatic desktop screen scaling feature, for example, would automatically scale the desktop based on some combination of screen size and DPI, a feature that has since been enabled in more recent Windows versions by default. It also included PowerShell 4 and updated Internet Explorer developer tools.

That month, Windows 8’s usage share rose to just 3.82 percent, still behind Windows Vista (4.75 percent), but ahead of all individual Mac OS X versions. Worse for Microsoft, usage of Windows 7 wasn’t falling month-over-month.

But something weird was happening with Microsoft’s stock. Despite the troubles its latest flagship was experiencing, Microsoft stock hit $33.10 in early May, its highest point in over five years. The stock had been stuck in the mid-$20s since late 2007, but if you factored out a single strange upsurge, Microsoft’s stock had been stuck at that level for over a decade.

“Speculation abounds as to the cause of the upsurge,” I wrote. “But Microsoft, long seen as a slow-growth company with an aging software business, recently surprised investors with spectacular quarterly earnings that belie the troubles in the PC industry. It seems that investors are finally figuring out that the firm is doing a great job of transitioning from its traditional businesses to a new world of online services. This year, it will have created at least two new billion-dollar businesses, Azure and Office 365, both of which are entirely cloud-based.” Microsoft had found its future, and the successes would continue, with or without Windows.

In late May, Mary Jo Foley reported that Windows 8.1 would include the ability to boot directly to the desktop, bypassing the Start screen. This change was present in the so-called Windows 8.1 Milestone Preview (MP), which I was told had been issued internally at Microsoft about two weeks prior and could be released to the public as a “release preview.” The build also included the new Start button, on the desktop only, and the ability to replace the Start screen with the All Apps view, another concession to feedback.

And then Microsoft finally went public with the news. On May 30, 2013, it provided a “first look” at the changes coming in Windows 8.1, which it planned to deliver as a free update to Windows 8 later that year. Oddly, it would be delivered through the Windows Store and not Windows Update.

Sidenote: This was the first and only time that Microsoft would deliver a Windows version upgrade via the Windows/Microsoft Store.

“It’s Windows 8 [but] even better,” Microsoft corporate vice president Antoine Leblond wrote in the announcement blog post. “Not only will Windows 8.1 respond to customer feedback, but it will add new features and functionality that advance the touch experience and mobile computing’s potential.”

After six-plus years of the Windows team ignoring feedback, this was a revelation. Windows 8’s feature set had been developed internally largely in secret from both Microsoft and the public, and the Windows team had made very few concessions to the feedback they eventually received. But Windows 8.1 would arrive roughly one year after its predecessor, not three, and it would be heavily influenced by feedback. With Sinofsky gone, Microsoft, finally, was listening to its customers.

Most of the new Windows 8.1 features are noted above, but this release would also include improved personalization capabilities, major changes to search with Bing integration, improvements to the built-in apps, improved mouse and keyboard support, and more.

But the biggest new change, perhaps, was to the Snap feature. Where Windows 8 restricted the secondary snapped app to a tiny slice of onscreen real estate, Windows 8.1 Snap would be much improved.

“Windows 8.1 brings variable, continuous size of snap views,” Leblond wrote. “You will have more ways to see multiple apps on the screen at the same time. You can resize apps to any size you want, share the screen between two apps, or have up to three apps on each screen if you have multiple displays connected. You can have different Windows Store apps running on all the displays at the same time and the Start Screen can stay open on one monitor. This makes multi-tasking even easier. Also in Windows 8.1, you can have multiple windows of the same app snapped together – such as two Internet Explorer windows.”

The updates were much appreciated and eagerly anticipated. But Leblond, a holdover from the Sinofsky era, was not contrite, and he did not apologize for the many mistakes his team had made with Windows 8.

“Windows 8 [was] a bold, necessary move towards mobility for the PC industry – pushing ourselves and our industry ahead with a touch-first approach that is redefining the PC as we know it, while offering the best of all worlds across any device at any time,” he wrote, echoing the failed marketing of the past. “Our commitment to that vision—and to always improving—remains the same as we stay the course of the evolution of Windows with Windows 8.1. We’ve been watching, we’ve been listening; Windows 8.1 will continue to build on what you love, bringing the latest advancements in hardware, apps, cloud services, and the OS to enable a unique experience in everything you do.”

Leblond promised more information at Build 2013, which would be pushed up from its prior Fall slot to late June, and that Microsoft would issue a public preview of Windows 8.1 at that time.

Tami Reller appeared at the Computex tradeshow in Taipei on June 5 with Nick Parker and Antoine Leblond to give the first public demo of Windows 8.1. The most notable announcement of this appearance was that Windows RT 8.1 would include Outlook 2013 RT, as they called it, a major Office app that had been missing from the initial RT release. Reller also showed off the Acer Iconia W3, a “small screen x86 tablet” that would come with Office 2013 Home and Student edition “right out of the box.”

The firm also released a video featuring Jensen Harris as it had for the initial Windows 8 reveal, showing off new Windows 8.1 features. This included new functionality in the lock screen, Start screen, All Apps, desktop, Search, SkyDrive, Snap, and Photos.

In early June, Microsoft hosted its biggest annual conference, TechEd 2013, in New Orleans. The show was energetic and captivating, I wrote at the time, but not because of Windows. Instead, Microsoft revealed that it would focus on cloud services going forward.

“To enable this transformation, we had to make deep changes to our organizational culture, overhauling how we build and deliver products,” Microsoft Server & Tools president Satya Nadella wrote in a letter to employees. “Every one of our division’s nearly 10,000 people now think and build for the cloud—first. Our engineers live a ‘live-site’ first culture to better respond to our customers in real time. And we are laser-focused on building more complete end-to-end service scenarios, or modern workloads, to deliver more value to our customers and partners.”

Granted, Mr. Ballmer had first announced this shift to shareholders the previous October, but that revelation had been largely overshadowed by the splashy, if futile, Window 8, Windows Phone 8, and Surface launches.

“The products and services introduced today illustrate how Microsoft is the company that businesses can bet on as they embrace cloud computing, deliver critical applications, and empower employee productivity in new and exciting ways,” Microsoft corporate vice president Brad Anderson said during a keynote address. “Only Microsoft connects the dots for the enterprise from ‘client to cloud’.”

This transition would eventually lead to a massive Microsoft reorganization, which was planned to coincide with the shift to a new fiscal year on July 1. My sources told me at the time that the reorg would result in two primary divisions that map directly to Microsoft’s “services and devices” direction. The services part of the company would be run by current Server and Tools president Satya Nadella, and the devices part would be run by current Windows co-chief Julie Larson-Green, I was told. But a Wall Street Journal report noted that the plan shifted repeatedly, and Larson-Green’s poor performance at the WIRED event the previous month had doomed her chances of failing upward yet again.

Microsoft did at least provide some Windows information at the show. It had sold 100 million Windows 8 licenses by that time, one of the slowest rollouts in modern Windows history, but the software giant would right the wrongs with Windows 8.1, which I viewed as a “mulligan” as it would, in effect, relaunch the platform with a new generation of PCs and devices that fall.

Surprisingly, Windows 8.1 would also target businesses more explicitly than its predecessor with new features like Wi-Fi Direct printing, Miracast wireless display, mobile broadband support with tethering, VPN improvements, device encryption in all product editions, smart remote wipe, workplace join, and more.

Microsoft Build 2013 was held at the Moscone Center in San Francisco, a first. It had been just 8 months since the previous Build event and, once again, it was CEO Steve Ballmer who greeted the crowd. But for the Windows fans in the audience, this time was different: there was good news to discuss.

“We have a lot to show you today,” he began, addressing the 6,000 showgoers and approximately 60,000 people watching the livestream. “We got a whole lot of Windows, a whole lot of Windows Phone to talk to you about, a whole lot of Windows Azure, and I think you’ll really get a sense of how some of the really amazing and cool stuff that’s coming really fits together very nicely.”

Noting the short amount of time that had elapsed since the previous and uneventful Build conference, Ballmer made lemonade: this was about the suddenly rapid pace at which Microsoft’s platforms were now evolving. The company was undergoing a transformation, he said, implicitly acknowledging that getting the plodding Steven Sinofsky and his old-fashioned three-year product cycle out of the way would open the floodgates. The company, he said, was moving to a “rapid release cycle. Rapid release. Rapid release.”

“We are going to show you Windows 8.1 today,” he said. “But you can think of that as the new norm for everything we do. For Windows releases, with devices, with Azure, and Office 365. Rapid release cadence is absolutely fundamental to what we’re doing.

The “Windows 8.1 Preview edition,” as he called it, was now available for download, he announced, ushering in the first stage in what would be a multi-pronged apology for the mistakes of Windows 8. “You will see a heck of a lot of movement, a heck of a lot of innovation, a heck of a lot of responsiveness, all coming to market in a very, very rapid timeframe.”

After a short bit about some of the new Windows Phones coming to market, Ballmer talked about Windows devices—remember, the firm was downplaying the term PC by this point to emphasize the diversity of hardware on which its core platform could run—and revealed that Microsoft was now expanding the capabilities of Windows beyond traditional PC form factors and “workhorse” 2-in-1 tablets to include a new small tablet form factor.

“The Windows device of today doesn’t look like the PC of five years ago or ten years ago or 15 years ago,” he said. “It’s really been, in this short 7 months, since we launched Windows 8, and we turned on the switch [he snapped his fingers] with our hardware partners, that we’ve seen an explosion in the range of innovative new devices that are being designed with Windows inside. For the first time today, we’ll show you small tablets running Windows.” Showgoers, he noted, would get a freebie Acer Iconia small tablet on which to experience Windows 8.1. Fittingly, it had an 8.1-inch display.

“This small tablet form factor is very important,” he continued. “I wouldn’t call ‘em PCs, but there will be Windows small tablets … we’re going to see a proliferation of Windows small tablet devices over the course of the next several months. This is innovation that had to be unlocked. We had to do work in Windows, and our partners have had to do work in semiconductors and system designs .”

Sidenote: Small tablet form factors PCs would indeed experience a one-year boom in popularity before the user base returned to what it always did: using Windows on traditional form factor PCs. But this boost was enough to get Microsoft through the Windows 8.x era, and give it time to reimagine Windows yet again, this time while paying attention to feedback.

Ballmer then publicly called out Microsoft’s PC maker partners for screwing up the Windows 8 launch. It was the third time since the launch that Microsoft had blamed its most important partners for its own screwups.

“When we brought out Windows 8, we talked about touch, touch, touch, touch, touch, touch, touch, and more touch,” Ballmer said, pointedly. “[But] when you went into the stores last Christmas to look for a Windows 8 machine, most of ‘em didn’t have touch. And yet what we’ve seen in that timeframe is a real focusing by our industry ecosystem on bringing Windows 8 touch systems to market. Windows 8 touch All-in-Ones, touch notebooks. Touch is incredibly valuable in what I might refer as ‘traditional PC form factors.’ The advantages of being able to touch your All-in-One or even the notebook, the notebook that maybe you use all day every day with the mouse and the keyboard … the ability in a more casual moment to reach out and touch is so obvious. And yet it’s really only in the Windows family that we have a range of touch notebooks. And you will see … literally an outpouring of new [touch] devices.”

“One of the things we’ve seen in our user research is that customers who have Windows 8 on touch systems are much, much happier than other Windows 8 customers, and in fact, they’re even much happier than our Windows 7 customers,” he added. He then launched into a discussion about 2-in-1 tablets, which were of course as ideal for Windows 8 as any PC could be. And he highlighted a small handful of notable new apps—like Flipboard, Facebook, and NFL Fantasy Football—that would soon arrive on Windows 8 via the Windows Store.

But on that day in mid-2013, the only thing that was truly important to the Build audience was how Microsoft would fix the core platform, and quickly. And on this topic, Ballmer acknowledged but did not truly apologize for the mistakes, and he instead presented a view that Windows 8 had simply landed too far in one extreme, and that they would adjust accordingly.

“The importance of desktop applications was never more reinforced to us than in the course of the past six months,” he began, which was an odd statement to make given that desktop applications were the only option in Windows for its entire history prior to those six (really 8) months, and that their importance was always obvious. The audience applauded, and he paused to look at the teleprompter. This was the bit he needed to get exactly right.

“Since we announced and shipped Windows 8, uh, suffice it to say, uh, we pushed boldly in Windows 8, and yet what we found was that we got a lot of feedback from users of those millions of desktop applications that said, if I was to put it in coffee terms, ‘why don’t you go and refine the blend here?’ Let’s remix the desktop and your modern application experiences. Let’s balance ‘em better. Let’s complete ‘em better. Let’s make it easier to start applications the way we’re used to, with the millions of desktop applications that we use to be productive every day.”

“So what we will show you today is a ‘refined blend’ of our desktop experience and our modern user interface and application experience. You will see that we bring back the Start button to the desktop.” Here, he was, of course, interrupted by thunderous applause. “You will see that if you want to boot to the desktop, you can. Boot. To. The. Desktop.” Again, thunderous applause. “You will see that we have nonetheless enriched the Start screen and Start menu [there was no Start menu], but we have brought back the flexibility for you to see all of those many, many, many applications that you use every day. You will see that we have built into the user experience more multitasking options, so you can have more things up on the screen like you’re used to in desktop mode. You can use more screen real estate for multiple monitors. We said, let’s reblend the desktop and the modern experience, and it’s not just these hundreds of thousands of new applications that are in the Store … Let’s make sure we have a great path forward for [users of desktop applications].”

From there, Ballmer moved on to some Bing integration features that would go on to be superfluous. And then he ushered Julie Larson-Green on stage for a run-through of the new Windows 8.1 features and changes. The content of her demo is unimportant, as we’ve already discussed the changes. But her presentation bears a quick discussion.

“So, I’ve got a demo, but the most exciting feature you’ll see is that we’re here in eight months with an update that shows how much more responsive our engineering has become,” she started. This opener was interesting on different levels. First, it implicitly criticized the glacial pace of her predecessor, Steven Sinofsky, who was also her mentor and the only reason this unremarkable person made it so high up into Microsoft’s corporate hierarchy. Second, she strutted on stage very quickly and delivered this line in a burst of rapid speech that suggested the new speed with which the Windows team was moving would need to be verbally emulated as well to drive home the point.

“Windows 8 was the most ambitious vision for Windows ever,” she continued at the same fast pace. “Windows 8.1 is an update that refines the vision of Windows 8 and is responsive to the latest industry trends.” (Apparently, some new trends had emerged in the 8 months since Microsoft had launched Windows 8.) “At the same time, we’ve been delivering continuous improvement. We’ve had over 800 updates to Windows [8] since we launched in November [Windows 8 launched in October] that address everything from performance, efficiency, to the look and feel and new features in the product.” This would have been news to anyone actually using Windows 8.

Larson-Green managed to keep up the frenetic pace throughout her demo, and it quickly became clear that she was hiding an innate nervousness despite her years of public performances. She ended her bit awkwardly, by posing on stage with the Acer Iconia tablet that Microsoft was giving away to attendees. (And unlike Larson-Green, I know the name of the device.)

Then she handed things over to Antoine Leblond, another Sinofskky-era holdover who wasn’t long for this company; he would exit Microsoft after 25 years in early 2014.

Leblond discussed the developer improvements in Windows 8.1, which were underwhelming and didn’t involve any major new platform features. In addition to providing support for all the new Windows 8.1 features, Microsoft would update the WebView, GridView, and ListView controls and introduce new Search, Hub, Flyout, Date picker, and Time Picker controls. And he revealed that Microsoft would soon offer Windows Store gift cards, and that Windows 8.1 would natively support 3D printing (which was “super-hot right now,” Leblond noted). It was a pretty spare update from a developer’s perspective, but Leblond somehow then transitioned from developer topics to a demo of new Windows 8.1 PCs and devices.

“We will sell literally hundreds of millions of Windows devices this year,” CEO Steve Ballmer stated in his closing remarks. “Windows Phones, Windows tablets, Windows PCs, Windows, Windows, Windows … I want you to leave with just one thought. The future of Windows is very bright.”

To install the Windows 8.1 preview, testers had to take multiple steps involving downloading a small update from the Microsoft website, rebooting, opening the Windows Store, and then downloading the 8.1 Preview from there. Depending on the PC you owned, you might have had to also install additional driver updates, too, before you get the preview.

It was worth it: Windows 8.1, even in preview form, was a major functional update that dramatically improved the user experience when compared to the shipping version of Windows 8. And it even included user help with pop-ups that explained key hidden UIs.

In early July, Microsoft announced that it would indeed rapidly release Windows 8.1: the update would ship to its PC maker partners in late August. In a curious move, the firm also confirmed that Windows 8 license sales had nosedived by referencing the stale two-month-old 100 million figure and adding only that it now had “more than 20 million enterprise evaluations.”

Two weeks later, Microsoft announced that the Windows 8.1 (and RT 8.1) update would be available via the Windows Store on August 18, 2013, and on new PCs and devices starting October 18. Then, on August 27, it revealed that it had just barely hit its August target for delivering the new version to PC makers.

“Windows 8.1 is an important update,” the announcement post noted. “We have delivered in a very short time an update to the OS that will bring an even greater unified experience for our customers. As we consider the code we just handed off, and the new intuitive and fluid computing experience it provides—anytime, anywhere, across all devices—we’re confident we made the right bet in continuing our vision and following through on our commitment to rapid innovation and responsive engineering.”

Microsoft also used this milestone to explain that it was moving past well-established release milestone terms like RTM (“release to manufacturing”) with this release. It was the last gasp of the “not invented here” mentality from the Sinofsky era.

“Times have changed, with shifts to greater mobility and touch as well as the blurring of work and personal lives,” Mr. Leblond explained. “As such, we’ve had to evolve the way we develop and the time in which we deliver to meet customers with the experience they need, want, and expect. We’ve had to work closer to our hardware partners than ever before. Reaching this milestone is about optimizing the overall experience for our customers. Our hardware partners are in a position to prepare the wide array of innovative devices our customers can expect later this fall—just in time for the holidays.”

More to the point, Microsoft wasn’t done working on Windows 8.1. It would use the time between then and the general release to continue iterating with bug and security fixes, and it would ship a set of interim fixes, called Quick Fix Engineering (QFE) updates, that users would install via Windows Update after they upgraded to the new version or purchased a new PC.

Also in mid-July, we learned that Steve Sinofsky would net $14 million in previously issued stock. In return, Sinofsky agreed to “not disparage” Microsoft going forward and not accept employment at a competitor through the end of 2013. Microsoft has also agreed to indemnify Mr. Sinofsky “against claims arising from acts or omissions relating to his employment at Microsoft.”

“Given Steven’s 23 years of strong service at Microsoft, which included leading teams that produced six versions of Office and two versions of Windows, the company will continue to provide him with the economic value of the stock awards he earned during his employment, similar to the retirement benefits we provide employees who work at least 15 years and retire at 55 or older,” a Microsoft statement noted. “This agreement provides a number of important considerations for Microsoft, including a commitment that Steven will continue assisting with intellectual property litigation until January 1, 2017.”

In late July, Microsoft announced its latest quarterly earnings, which included the impact of a $900 million charge related to unsold Surface RT inventory. Windows Division revenue was up 6 percent year-over-year, but only because of Windows Upgrade Offer deferrals; without that income, Windows revenue fell 6 percent YOY. Surface was disastrous for Microsoft: in addition to the write-down, the firm revealed that Microsoft had spent an additional $1.4 billion marketing a product no one wanted, and it had delivered just $853 million in revenues. Heaping on the pain, ASUS revealed that it was dropping its Windows RT tablet.

Even more importantly, Steve Ballmer announced in August that he would be stepping down as CEO of Microsoft.

“I will retire as CEO of Microsoft within the next 12 months, after a successor is chosen,” he wrote in a letter to employees. “There is never a perfect time for this type of transition, but now is the right time. My original thoughts on timing would have had my retirement happen in the middle of our transformation to a devices and services company focused on empowering customers in the activities they value most. We need a CEO who will be here longer term for this new direction.”

The letter didn’t mention Windows even once.

In mid-September, Microsoft announced Windows 8.1 pricing. Customers not currently using Windows 8 could upgrade to Windows 8.1 for $119 or to Windows 8.1 Pro for $199, identical to the Windows 8 upgrade prices. But there was one big difference: Where Windows 8 was only available in upgrade versions at retail, Windows 8.1 would come as “full version” software that did not require a previous version of Windows to be installed. This, too, was the result of customer feedback.

Finally, the October 17 launch day arrived. But unlike with Windows 8, there was no splashy live event or celebration. Instead, customers could simply download the Windows 8.1 update from the Windows Store on their Windows 8 PCs, buy the full version of the software online, or head out to an electronics retailer and purchase it in a box. Starting the next day, it would be available via new PCs and devices as well.

“Windows 8.1 represents a more refined, or evolved, version of the vision that Microsoft has with regards to moving Windows into a new generation of personal computing that is defined by mobile devices instead of traditional PCs and mobile apps backed by cloud services instead of heavy desktop applications back by locally stored data,” I wrote in my review. “Had Microsoft just shipped Windows 8.1 a year ago—or perhaps just held off on Windows 8 until 2013—everything would have been fine: users would have embraced the new system, PC sales never would have tanked to the extent they did over the past year, and Microsoft’s position in this new mobile world of computing would have been less tenuous. That’s not really true, of course, but I do think that Windows 8 would have benefitted from another year in the hopper. More to the point, Microsoft could have avoided some unnecessary hurt feelings with users if it had simply listened and then shipped instead of vice versa.”

“We can’t reverse history, and the extent of the effects of Microsoft’s mistakes with Windows 8 won’t be truly known for years to come,” I continued. “But if you view Windows 8.1 as an apology, as I do, then let’s at least give the company some credit. They did listen, if belatedly. And while the leadership teams at Microsoft still believe firmly that the future is mobile devices, not computers. and online services, not local data, it is meeting the realities of today’s customer base in the middle. So we get the Start button but not the Start menu. We get a better desktop with reduced Metro meddling but not the full split some wanted. We get a system that is still very much a compromise, though Microsoft will of course market it as the best of both worlds … Windows 8.1 is a much-appreciated improvement.”

That same month, Gartner and IDC weighed in on the PC industry, noting that sales had declined 8 percent to 81 million units, with buyers continuing to “evaluate options and delay PC replacements” because of Windows 8. PC sales had dropped to their lowest volume since 2008, when Windows Vista was the current offering.

Microsoft confirmed the results when it announced record earnings for the quarter ending September 30: Windows revenues to PC makers had declined 7 percent overall in the quarter. The firm had deferred just $113 million in revenues related to Windows 8.1 pre-sales.

Fortunately, Microsoft would continue fixing the problems with Windows 8. There would be major leadership changes, with the remaining Sinofsky-era holdouts flung aside as a new CEO emerged. There would be a second update to Windows 8 that finally brought back the Start menu, fully reversing one of Sinofsky’s worst decisions. And most dramatically, there would be a new software development strategy that would unify Microsoft’s Windows offerings into a single, cohesive platform across PCs, phones, Xbox, and more. It was called One Windows. And it wouldn’t change a thing.

More soon.