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As Microsoft readies Q2 earnings report, non-financial questions swirl

The future of Windows, Office for iPad and the CEO search are issues over which there is uncertainty

By Juan Carlos Perez, IDG News Service
January 23, 2014 11:07 AM ET

IDG News Service - Microsoft will detail Thursday its second quarter financial performance, but it's not clear whether the company will take the opportunity to also clear up some of the uncertainty over key products and corporate changes.

Take Windows. In recent months, there has been speculation about the future direction of the OS, after the mixed reception for Windows 8 and its 8.1 update. It's not clear whether Microsoft will try to further fine tune the OS with an 8.2 update or instead focus on its next major version, which outsiders refer to informally as Windows 9. Although Microsoft addressed some of the main Windows 8 complaints in 8.1, the update has suffered from a series of bugs of varying severity since its release in mid-October.

Another open question around the OS is whether Microsoft will in the long run retain both Windows Phone and Windows RT -- the Windows 8 version for ARM devices -- or merge their code bases into a single mobile OS.

While speculation over the future direction of Windows gathers steam, many companies that still have XP on most or some of their PCs fret over the end of its support in April. "There are plenty of frustrated CIOs holding the bag on instances of XP they can't get rid of for valid reasons, now fuming at the cost of dealing with its obsolescence. All of this as Ballmer leaves the building," said Forrester Research analyst David Johnson via email, referring to CEO Steve Ballmer's plan to retire this year.

Then there is the much anticipated version of Office for non-Windows tablets, which executives have said is in the works but hasn't yet materialized. There is a lot of interest among iPad users in particular to have a full, native version of Office for the Apple tablet.

And as Microsoft boosts its efforts to build its own hardware, the Surface 2 tablet hit another rough patch recently due to a faulty firmware upgrade, the latest in a series of mishaps affecting the Surface family, which is key to the company's ambitions to significantly expand its device business.

At the end of its fiscal year in mid-2013, Microsoft took a US$900 million charge due to the anemic sales of the Surface RT models, and that first generation of Surface tablets got a lukewarm reception in the market in general. The Surface 2 models have been better received.

In corporate matters, it's not clear at what stage of completion the major reorganization Steve Ballmer unveiled in July is. Dubbed One Microsoft, it's intended to make the company operate more cohesively by eliminating in-fighting among the different product teams.

As part of the restructuring, Microsoft dissolved its five business units -- the Business Division, which housed Office; Server & Tools, which included SQL Server and System Center; the Windows Division; Online Services, which included Bing; and Entertainment and Devices, whose main product was the Xbox console. It replaced them with four engineering groups organized by function, around OSes, applications, cloud computing and devices, and by centralized groups for marketing, business development, strategy and research, finance, human resources, legal and operations.

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