Reversing or slowing that trend is critical for Microsoft. It still relies on the PC industry for about 55 percent of its revenue, according to Nomura Equity Research analyst Rick Sherlund. "The launch of Windows 8 should provide a few years of robust growth and opportunity for Microsoft to reposition itself to better defend its position against challengers," Sherlund wrote in a note after Microsoft reported the latest erosion in its Windows division.
Besides spurring more sales of the new operating system, Windows 8 is likely to drive demand for the next generation of the Office suite, another major moneymaker for Microsoft.
Windows 8 could inspire more PC makers to design machines that combine the convenience of tablets with the utility of a notebook computer. These devices would be similar to the so-called "ultrabook" computers that offer a Windows-based version of Apple's lightweight MacBook Air machines. Once Windows 8 is available, the ultrabook line could be expanded to include machines equipped with a screen that swivels off the keyboard to take advantage of the system's touch controls and provide a tablet-like experience.
Microsoft clearly envisions Windows 8 becoming the foundation for pure tablets, too. That's why it's developing a version of Windows 8 that can run on the more tablet-friendly microprocessor technology licensed by ARM Holdings. That version will complement the Windows 8 design that will run on the Intel Corp. and Advanced Micro Devices Inc. chips that power most PCs.
HP, the world's largest PC maker, is already counting on Windows 8 to deliver better times. The company's division that includes desktop and laptop computers suffered a 15 percent drop in revenue during its more recent quarter ending in January. CEO Meg Whitman said last week that HP expects to release PCs and tablets running on Windows 8 in time for the holiday shopping season. HP's Windows 8 product line will include a tablet designed for corporate customers.
The biggest question hanging over Windows 8 is whether the long wait for the software will leave Microsoft hopelessly behind Apple and Google in mobile computing.
Whatever headlines Microsoft grabs during Wednesday's preview are likely to be quickly overshadowed next week when Apple is expected to show off the third version of the iPad.
Meanwhile, Google says more than 300 million smartphones and tablets are already running on its Android software, with another 850,000 devices getting activated each day. At that rate, another 155 million to 180 million devices could be running on Android by the time Windows 8 comes out in September or October. As it is, a version of Android is already running the second hottest-selling tablet, Amazon.com Inc.'s Kindle Fire.
"Microsoft is late to the game and this is a different game than they have been playing," Cearley said. "But if they hit a home run with Windows 8, it could still turn some things around."
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