Want Windows 8? You'll have to upgrade

Harvey Norman have celebrated the launch of Windows 8.

MICROSOFT launched its biggest operating system overhaul in Sydney this morning, but faced criticism over a lack of Windows 8 details for consumers, confusing pricing, and its removal of traditional Windows menus.

The Australian launch followed worldwide launches overnight in which chief executive Steve Ballmer called the introduction of Windows 8 a "bold, innovative" move that had been tested for more than 1.24 billion hours worldwide.

"No product anywhere receives this kind of testing anywhere in the world," Mr Ballmer told a New York audience.

But the overhaul has ditched menus and navigation familiar to Windows users, including the once well-marketed Start button.

Instead, users will face an opening screen of coloured tiles, simplified and hidden menus, and a new Windows Store for app downloads.

Microsoft Windows business leader Tina Flammer said users would need to adapt to the new software menus, but it had been designed for an easy transition.

"Windows 8 was designed to be intuitive," she said.

Microsoft CEO Steve Ballmer gives his presentation at the launch of Microsoft Windows 8, in New York.

"We know that without the traditional (start button) it is different. Every time we bring out a device the familiarity is different."

But Microsoft faced further scrutiny at its Australian launch for vagaries around the software's pricing and packages.

After several questions, Ms Flammer confirmed Microsoft would not sell a full version of Windows 8 in Australian stores, instead offering only upgrade packages.

The Windows 8 Pro upgrade package costs $69.99, she said, while the Windows 8 upgrade costs $39.99.

Another version of the new Microsoft software, Windows RT, would arrive pre-installed on tablets and "thin and light" laptops, Ms Flammer said, although Microsoft would not elaborate on its differences.

A lot is riding on the success of Windows 8 for Microsoft as it seeks to maintain its share of the computing software market. The company's software currently runs on more than 90 per cent of computers worldwide, though it faces increasing competition from tablets, where Apple dominates the market.

Microsoft says its 'reimagined' Windows 8 will launch in 37 languages and 140 worldwide markets.

Microsoft also began selling its first tablet computer today, named Surface.

The tablet, powered by Windows 8 and Windows RT, will feature a 10.6-inch screen, up to 64GB of storage, two cameras and a cover that doubles as a keyboard. The tablets are priced from $559 to $789.

"You are going to love the new Windows," CEO Steve Ballmer said at the New York launch.

But 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.

Critics say it's a confusing jumble that will frustrate users accustomed to the older versions, particularly when they switch to desktop mode and don't see the familiar "start" button and menu.

Microsoft Chairman Bill Gates sits on stage during a video portion of the Windows 95 Launch Event in 1995. Windows 8 is the most radical redesign of the operating system since its launch, and will see the disappearance of the iconic start button at the lower left corner of the screen..

The biggest question hovering over Windows 8: Is it 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.

And Windows 8 must address not only the upheaval in the computing market since Windows 7 came out in 2009, but also have the flexibility to adjust to future shifts in technology before Microsoft releases another version in two or three years.

Previous versions of Windows and other Microsoft products such as Office are so deeply embedded in companies and government agencies that Microsoft is still assured a steady stream of revenue from that segment of the market. That loyal base of customers is one of the reasons that Microsoft is expected to earn $US25 billion on revenue of $US80 billion in its current fiscal year ending next June.

Windows 8 will hit the market backed by an estimated $US1 billion marketing campaign. The advertising frenzy is just one measure of how important Windows 8 is to Microsoft's future.

Mr Ballmer's margin for error is slim after being consistently outpaced by Apple and Google in his nearly 13 years as CEO. During his tenure, Microsoft's stock has lost nearly half its value, wiping out more than $US200 billion ($194 billion) in shareholder wealth.

Microsoft CEO Steve Ballmer gives his presentation at the launch of Microsoft Windows 8. Picture: Richard Drew

But the company's board hasn't expressed any public dissatisfaction with Mr Ballmer, who is Microsoft's second-largest shareholder with a 4 per cent stake worth $US9 billion. Only his good friend and predecessor, Microsoft founder Bill Gates, owns more of the company's stock. Mr Gates has a 5.5 per cent stake.

Since Mr Ballmer succeeded Gates as CEO in January 2000, Microsoft's annual revenue has nearly quadrupled to $US74 billion and expanded into lucrative new territory with its popular Xbox 360 video game console, which has given the company a platform for delivering services to television sets.

But Microsoft has been slow to respond to technology shifts and has made some costly missteps trying to catch up.

Some of the best-known blunders include the company's iPod clone, the Zune, and its $US6.3 billion acquisition of Internet ad service aQuantive.

Investors want to see Microsoft do something more.

The nagging fear on Wall Street is that the PC industry is past its prime and heading into a gradual decline that will pull down Microsoft, too.

Panos Panay, the general manager of the Microsoft Surface with The new Microsoft Surface tablet on display following the official launch of Windows 8. Picture: TIMOTHY A. CLARY

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 PCs.

Worldwide PC sales year are expected to decline this year for the first time since 2001, according to the research firm IHS iSuppli. It's a drop of just 1 per cent, but it underscores a troubling trend that has been hurting Microsoft.

The shift to mobile devices has whittled Microsoft's worldwide share of the computing device market from 67 per cent in 2008 to about 30 per cent today, estimates Forrester Research analyst Frank Gillett. Thanks to its Android software for phones and tablets, Google is now the leader with a 40 per cent share of the computing device market. Apple stands at 20 per cent.

Analysts don't expect Microsoft's corporate and government customers to immediately embrace the new system, no matter how much it's hyped. About half of this traditionally cautious group of customers still haven't upgraded to Windows 7. Most analysts expect companies and government to hold off on switching to Windows 8 for at least another year.

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