Is Windows 8 Really a ‘Catastrophe’ for Content Creators?

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Valve Software bigwig Gabe Newell has his long knives out and he’s slashing in Windows 8’s direction, going so far as to call Microsoft’s imminent operating system makeover a “catastrophe.”

It’s not the first time for Newell, who allegedly took umbrage with Windows 8 while visiting with Linux community buff Michael Larabel, who wrote “[Newell’s] level of Linux interest and commitment was incredible while his negativity for Windows 8 and the future of Microsoft was stunning.”

(MORE: Steam Native Linux Client Near? Gabe Newell Trashes Windows 8?)

No, I don’t think Newell means the operating system itself is the devil, as some seem to be reading it, but rather that he’s addressing a few significant platform-related features launching with Windows 8, and what they entail for what he refers to as “the openness of the platform.”

Here’s what he had to say during a recent Q&A at the Casual Connect games conference that ran July 24-26 in Seattle (courtesy a Venturebeat transcript):

I think that Windows 8 is kind of a catastrophe for everybody in the PC space. I think that we’re going to lose some of the top-tier PC [original equipment manufacturers]. They’ll exit the market. I think margins are going to be destroyed for a bunch of people. If that’s true, it’s going to be a good idea to have alternatives to hedge against that eventuality.

Steam, Valve’s digital distribution platform, is, by leaps and bounds, most pervasive on Windows (it’s also available for OS X, and there’s a Linux version in the offing). Windows, therefore, is no doubt where Steam makes most of its bones.

Newell’s concern: That Windows 8 is a platform-closer, by which he means Microsoft’s forthcoming “Windows Store.” Windows Store is essentially Microsoft’s answer to Apple’s App Store — a digital distribution platform for both paid and free applications that support Windows 8’s tile-like “Metro” interface. The kicker: Metro-enabled apps will only be allowed over Windows 8’s guardrails by going through the Windows Store itself. And like Apple, Microsoft intends to take a 30% cut of any sales made through the store.

That, argues Newell, means some PC makers may be forced out of the market because of dwindling sales margins (in turn because, presumably, they’d depend on revenue from bundled apps or their own Metro-enabled apps, from which Microsoft will, under Windows 8, be taking a much bigger cut). And since Valve’s revenue model is currently driven foremost by the PC, the loss of PC makers could indeed be a huge blow to its own profits. Anything that threatens Valve’s ability to access its biggest audience is a threat to its bottom line.

What about the argument that third-party software makers have generally benefitted from Apple’s App Store, despite Apple’s 30% profit “tax”? This argument goes that, without Apple, these developers would be making far less or nothing at all without their exposure, through the App Store, to a rising tide of iOS devices (and, more recently, the Mac App Store in OS X). If that argument is valid, does it suggest that Newell’s crying wolf?

Any answer’s going to be a guess, since it involves speculation about whether third parties are going to support the Windows Store. In order for developers to do well, Windows Store has to do well, and so forth — it’s an interdependent feedback loop, and the contingencies are innumerable. But a few points in Windows Store’s favor: The 30% cut drops to 20% once the applications exceeds $25,000 in revenue, and Microsoft doesn’t take anything from third-party transactions.

(MORE: 6 Tablets to Consider for Windows 8′s October Launch)

What’s more, you only have to enter Windows 8 through Windows Store’s gates if you’re designing a Metro-interface application. If your app isn’t Metro-enabled, you can bypass those gates entirely. So say Valve releases a Metro-enabled version of Steam — a freely downloadable app today — to distribute through the Windows Store. It benefits from any exposure, especially if it’s a popular download and consistently ranking in Windows Store’s charts.

Of course Newell’s broader point about the recent regulation by companies like Apple and now Microsoft of the process whereby we shop for and consume content on our computers shouldn’t be simply waved off. Yes, “catastrophe” sounds a little apocalyptic to me, too, especially given the pot/kettle issue. Look at what Steam itself is, how it’s grown and taken control of PC gaming and what Valve itself does in policing its turf as well as aggregating and sharing data about its users. It’s all, no doubt to Valve’s mind (just as Microsoft’s) for the “greater benefit” of its users.

But yes, there’s reason for anyone to be concerned when a company takes an open system and replaces it with one that, in addition to requiring content creators pay at the toll booth, includes strictures that prohibit content that doesn’t meet, say, a company’s definition of what is and isn’t morally acceptable. Is it a violation of free speech when a private company chooses to censor an app containing nudity or overt political themes, as Apple has itself done in the past? Maybe not. But what happens if the market shifts so that the only way to access such apps is through a private distribution system with those restrictions?

Valve’s reaction to platform lockdowns, according to Newell: Hedge your bets.

Why do we have people working on Linux? That’s the second part of the problem. In order for this innovation to happen, a bunch of things that haven’t been happening on closed platforms have to occur and continue to occur.

And:

So we’re looking at the [PC] platform, and up until now we’ve been a free rider. We’ve been able to benefit from everything that’s gone into the PC and the Internet. Now we have to start finding ways that we can continue to make sure there are open platforms.

And:

So we’re going to continue working with the Linux distribution guys, shipping Steam, shipping our games, and making it as easy as possible for anybody who’s engaged with us — putting their games on Steam and getting those running on Linux, as well.

Is Linux a “hedging” strategy? An analysis of traffic patterns provided by Wikimedia for June 2012 has 70% of requests coming from Windows devices, compared with about 7% from OS X, 6% from Linux, 7% from iPhones and 3% from iPads. As a profit-minded hedging strategy today, therefore, Linux looks like a pretty dismal bet.

But what about the long game? Windows was never a sure thing. What is? But if Windows 8 arrives and developers run for the fences, I think Microsoft’s more likely to abandon the model or alter it in a face-saving way, than allow Linux, iOS and OS X to drink its milkshake. So no, I don’t know that I fully agree with Newell that Windows 8 is a “catastrophe,” so much as an intrepid — and very risky — experiment. (Also: arguably an ineluctable one, given the success a company like Apple’s had with its own heavily policed and “taxed” content marketplace to date.)

Make that an experiment in which, for better or worse, come October 26, 2012, Windows 8 users are about to become participants.

MORE: Windows 8 Speed: It’s Not About the Benchmarks

47 comments
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Andrew Zar
Andrew Zar

It is a sad reality that pure operating system taxes are now so successful.  

Gene Guarin
Gene Guarin

He's just worried that his company will become non-essential. Steam is an app store at it's core and with Microsoft opening their own app store, he's afraid that developers will choose to pay the Microsoft tax directly, take advantage of Metro and skip Steam altogether.

Kee
Kee

Jeez, that's some pretty good post on the issue. I mean, Gabe is whining and is pointless

WoodenSaucer
WoodenSaucer

I don't care whether he is right or wrong. He's working on putting out games for Linux, and that's a good thing for a lot of people. Another thing Newell said was that the gaming situation is one of the last barriers for people wanting to switch to Linux. Let's just sit back and see what happens here. If he's right, maybe we'll see those stats change.

But I do agree that if Win8 becomes a catastrophe that Microsoft will try to save face and work on a new version that is desktop friendly. They'd be crazy to be stubborn with this if it doesn't work out.

Axe99
Axe99

Microsoft has only ever been about the customer in terms of how much they can fleece off them - few pseudo monopolies have charged more for less, and MS wouldn't look out of place in a line-up of Soviet state-run enterprises. I'm hardly surprised MS wants a slice of the 'store' action, just like the iOS store, it's a tidy rent-seeking operation. That it's tolerated more in the US than anywhere else shows just how free trade and libertarian the US isn't.

Cameron Strickland
Cameron Strickland

I'm giving Windows 8 new Metro look a shot I suppose, but I really hope it's an easy switch to the "classic" start button view.

Gromanon
Gromanon

People that cry about Windows 8 being hard to use don't understand that we are seeing a new Windows for new generation hardware. That's exactly why Microsoft newly unveiled Wedge Mouse and touch mouses is a must in order to enjoy Windows 8 to fullest!

justd80010
justd80010

You'll be disappointed... there is no Start button in Windows 8. 

Gromanon
Gromanon

if you married Start Menu so much, you might as well keep Windows 7, it's supported at least for another 3-4 years.

While I am buying Surface Pro for tablet and a Microsoft Wedge Mouse for my Desktop

justd80010
justd80010

Until 2020 it will be supported I think MS has stated.

Some of the functions under the start menu that I didn't really use I do use frequently in Win8, like the universal search in the Charms menu.

WoodenSaucer
WoodenSaucer

Well, there's no Start button on the new desktop mode, so you'll probably be disappointed. A word of advice for you, when you're in desktop mode and you can't figure out how to do anything, there is an unlabeled hot corner hiding in the upper right corner, and that's how you get to your menu. As important as that is, they didn't bother to give any indication that it is there.

Richard McMillan
Richard McMillan

i will never use windows 8, even under penalty of death, id almost rather go back to xp, windows 7 isnt that great

mmccullo
mmccullo

The Apple App Stores have not been a great success for my business. In fact, the opening of the Mac App Store cut my business by 50% as it highlighted all the free options alongside my offerings (guess which customers will prefer, often regardless of features, when offered the free alternative?). Isn't the average gross of each App Store "download" now well below 99 cents? That indicates that customers are simply looking for freebies. How does that help anyone in the software business actually make money?

Microsoft seems to be taking a big gamble in requiring that all Metro apps be distributed through their app store. Even Apple has not restricted the Mac platform to that extreme... yet.

yofuss
yofuss

The thing is all  main players are slowly but surely cutting their own throats with their rediculously  greedy grabs for cash,  30% cuts as started by the big bad apple must already be heavilly impacting peoples preferences amp; will eventually bring them back down to earth with an almighty thud, free online radio for instance will eventually spell the end for apples rip off itunes store, give it time,  multi-conglomerates will not get away with charging anymore than 10% at most, how many people can afford to pay over the top prices anymore with the unlimited array of pay for content services,  by by apple was nice knowing u!!!

Chuck Renner
Chuck Renner

Microsoft providing security?  That really is a joke.  I'd trust many other providers over Microsoft any day.

Chuck Renner
Chuck Renner

I've been using Windows 8 Consumer Preview.  Windows 8 apps are a disaster.  Why in the hell do I want every native app running full screen?  Kind of defeats the purpose of a high-resolution screen.  The Start "screen" is also a disaster.  Why do I want the Start screen jumping in front of all of my other windows just to launch a program.  Bring back the Start menu!!!

The Metro interface is the worst user interface I've EVER seen, even worse the "Unity" on Ubuntu (I use Gnome Classic on Ubuntu).

JohnOBX
JohnOBX

Aside from this, Windows has historically had to tinker a bit when it comes to their OS.    Win 98 was fairly successful (and stable) and then along came Me, which everyone hated.  Win XP was launched and remains a favorite OS for PC users everywhere and no wonder what with Vista's disastrous reception.   Windows 7 has slowly won over XP devotees, but Win8 has had its fair share of bad reviews and I think many will be loath to make the switch.

For your average end users such as myself, I'd be nice if we could count on a OS being THE operating system for at least 5 or 6 years before we had to start worrying about an upgrade.  

romano71
romano71

For a second, let's consider the possibilities: a market place that is closed would have its advantages, especially for Microsoft. It provides better control over product, which is how Apple has managed to maintain quality of the software sold. How about the security implications? it will probably be safer as well. How about streamlining of the business model? Sure, it puts the market in a fewer hands but then again, all retail is falling in the hands of few distributors whether it is electronics of software, it is a solid trend we cannot escape. I also think it will increase the number of start-ups, with home developers being in a position where they can sell their ideas and products without using a middle men. All in all, it doesn't seem too far-fetched.

decadre
decadre

Others in the Gaming industry are coming out in defense of Newell, including someone (sorry can't remember who) from Activision/Blizzard.

Christopher Fisher
Christopher Fisher

The last thing windows needs to do is become more like Apple. It's already bad enough having one Apple around; Apple has been more responsible for promoting closed, controlled platforms than any other tech company out there. It's so ironic that Apple fanboys think they're supporting some free spirited company, when in reality they're supporting a company that strives to restrict and control creators. 

Brendan Dooley
Brendan Dooley

I adore Valve, but Newell's being a baby. Just don't implement a Metro-enabled Steam application, and proceed like you have been so far. Unless I'm missing part of Newell's point, there isn't anything here - so far - to complain about but a little competition.

James Driscoll
James Driscoll

Microsoft Flight Simulator X seems to run better on Win-8 preview.

BeaveVillage
BeaveVillage

Apple has an App Store in their OS, Microsoft can have one in their OS.  In fact, Windows Store has been around for a decade, it will just have an icon in the actual OS now. 

Not a big deal until the day they announce the locking down of Windows, which will probably never happen.

zaglossus
zaglossus

Every other Windows OS is a catastrophe. For example: Vista a dud, 7 good. So 8 should be a dud.

Sam Trutna
Sam Trutna

 Except the response from the consumer preview has been largely positive. There were no such things for ME and Vista. So basically what I'm saying is that you're all full of crap. MS is basing the future of the company on Windows 8, it would be catastrophic not to get it right and they know it. None of their other OS's were geared to change the way the company does business completely.

sensi
sensi

Looking like a sore loser whining about the clear possibility of his own Valve store being buried deep under by the Windows store :  cry me a river... Now I am glad to see more games on Linux, that's the only positive thing in his partisan and PR drivel, but that may not really give them a better prospect on their mid-term earnings...

BTW I am a long time Valve user and its cynical pricing, asking Europeans to pay the same figure in euro than it is sold in US dollar, asking them to pay 20% more than US customers for the same digital download : that's pathetic. I know that it is most than probably to be blamed on the actual publishers but Valve could have put out its might to push them the gentle way toward fair pricing, they never have.

BottledWater
BottledWater

The VAT is responsible for the 20% fleecing not Valve.

sensi
sensi

Possibly but the VAT over here is a bit below 20%, so the american consumers would have to pay no VAT at all to have such a difference in price, are they?

worleyeoe
worleyeoe

Even the company's name, Valve, suggests restrictions. Newell is definitely crying wolf and being hypocritical, given his no more "freeloading" comment about his own company. And finally, what's the big deal? Valve's current model of gaming is built around the desktop side of W8, so how is this MS' fault that he doesn't want to compete on the Metro side?

Virginia J. Johnson
Virginia J. Johnson

The trend in the market is clear, Microsoft has read it correctly, people prefer app stores...SkilledExplorer.blogspot.com

justd80010
justd80010

Apple primary and Google to a lesser extent have taken much of the "risk" out of Microsoft's strategy... both prove that buying public don't have any issues with getting software on their devices through a single source like an applications store. It was really Apple that took the risk of putting that concept to the test, a risk met with amazing success. 

I myself welcome the time when I can purchase, download and update my software online, from my couch or desk, without having to go to Amazon. com, or Ebay or Best Buy or Office Max. I like the fact that my software is kept up to date with the tap of a finger or the click of the mouse, and that if I restore my system I can go online and reload all my applications without having to do it the old-fashioned way, by loading CD's one at a time over hours or days (like I'm doing this week after work after my wife's laptop failed last weekend). 

The trend in the market is clear, Microsoft has read it correctly, people prefer app stores. 

ShankarDelhi
ShankarDelhi

 Just to be nitpicky, Apple did not invent the concept of an "app

store."  Every Linux distribution since the first generation of Debian

has had application repositories, which offer the same and much more

functionality than an app store (except payment, of course : ) ).  

Apple merely took up that idea in a commercial sense along with the BSD

kernel etc.

ShankarDelhi
ShankarDelhi

Just to be nitpicky, Apple did not invent the concept of an "app store."  Every Linux distribution since the first generation of Debian has had application repositories, which offer the same and much more functionality than an app store (except payment, of course : ) ).   Apple merely took up that idea in a commercial sense along with the BSD kernel etc.

Chuck Renner
Chuck Renner

I completely disagree.  It ain't broke.  Don't fix it.  I like having my OS NOT locked down, and I like having choices for software providers.  I do NOT want Microsoft locking down my PC.  It's the same reason I use a "rooted" Android phone.  I can put any firmware and/or software I want on my phone.

The LAST thing I would want is less choices for installing software on my PC.  If I wanted that, I would have bought a Mac.

justd80010
justd80010

With Windows app store how are you getting less choices. Not only CAN you purchase non-Metro software directly from the vendor you HAVE to. You're not losing anything, you're gaining the ability to choose to have your software delivered directly via an app store OR purchase your software in the traditional manner.

Sam Trutna
Sam Trutna

 Some people prefer app stores. I detest them.

justd80010
justd80010

Some to the tune of billions of apps downloaded via app stores in the past 5 years. Like it or not, resist it or not, this is the way software is being delivered to modern computing devices. Just as, like it or not, digital delivery of music far exceeds physical distribution of music. 

derekl999
derekl999

Honestly, people have been downloading programs legitimately for years! Its where snapfiles, cnet, and others have seeded MILLIONS of downloads, as well as the actual publishers like Adobe, Microsoft, Apple, Steam, etc ... That is why places like Best Buy are failing. Why buy a physical disc when you can get it online for cheaper with full support? My issue would be that anything I get as freeware or something new from a publisher I've not heard of will have to jump through hoops to get their product. If you have a graphics editing app you've created, who's to say that Microsoft will allow it into their app store, when they can be making hand over fist money from whatever app Adobe comes up with?

 I am not a fan of "app stores" in the slightest and this is where I think that Microsoft if blowing it.

With the proliferation of iOS and Android, Linux and Windows are where most of the POWER users dwell.  Win and Linux are not closed box, and you can pick and choose what you want. I abhor iTunes, so I can use Mediamonkey, VLC, Winamp, XMBC, etc .. and mix and match however I want. I can build my own computer with any components I want, and upgrade whenever I want, AND build the same equivalent system to the latest MAC for 40 percent less.

I can use MSE, or AVG, or Avast for free, CCleaner,  Malwarebytes, and Spybots as well, and pay them if/when I wish.

There really is no incentive for AMD, Intel and nVidia to really make more powerful processors when Apple only approves of a few parts spread across their platforms. If Microsoft goes to an app store only, it will drive many of us to the last bastion of 'freedom' .. the many variations of Linux. I am already plotting out the buying of quite a few new versions of Win 7 to last my next few computer builds.

justd80010
justd80010

So called soft services will be hosted in the windows store and users will be funneled to those sites for non-metro apps.

Sam Trutna
Sam Trutna

 You seem to be stuck on this concept that it's windows store or brick and mortar and that's it. There are a myriad of readily available services that specialize in soft copies of software. The only people that could benefit from an app store are indie developers, and those are the only real success stories that emerge from any app store. Companies with an established user base and reputation have literally zero reason to utilize an existing central location. Look at gaming. They've been doing digital downloads for years now, and yet we've got a half dozen options still. Steam being the most successful, but there's Games for Windows Live, Origin, Gog, Amazon, and a bunch of others. Look at streaming TV/Movies. HBO, Amazon, Netflix, Hulu, and individual cable providers are all vying with actual content providers going with some, one, or all of them. Now look at music, I know a great many smaller artists that actively avoid using iTunes simply because of the regulations and fees. The metro interface isn't my complaint, its the fact that its tied to a system that is going to be lackluster.

justd80010
justd80010

100 million downloads of applications I would think. By "serious" do you mean productivity software, the best example of which is Office, we'll have to see how many users download Office to their PC via the app store... I imagine the # will be in the millions though. And other software like Photoshop will be hosted in the app store but  you'll be directed to the developer site to actually obtain the app. but I imagine those shopping for various applications will find it more convenient to do so from a central location than to go to each individual site as we have to now and it should help drive traffic to vendor offerings.

justd80010
justd80010

And don't forget security, how much have developers lost in revenue do to pirated software, promotional cost, revenue tracking, lowered cost of delivering updates, user feedback... lots of good things for developers. 

justd80010
justd80010

"Power users" is a tiresome term. At any rate it's not just for smartphones, the Mac OS is delivered via Apple's app store, nobody seems put out by it. Windows 8 is being delivered via Window's app store. User that would rather can still use the traditional method, but the overwhelming majority of consumers would rather obtain their software via a secure, central source and not deal with a physical medium. I recall in the early 0's how it was said people would never want music MP3 style, how that would never be the norm because people enjoyed having the CD with the liner notes and the pictures. My youngest son is 11 and hardly knows what a CD is and is almost certain never to spend money on one. Every track on his tablet is a digital track and not a single one was ripped from a CD.

I think distributors would prefer the regulated system, a system where they can compete with larger developers on equal footing unlike tradition delivery methods where you have to pay a premium for shelf space, and have to pay third parties to print and package your software and all the cost that go with those things. Either way you look at it you're gonna pay somebody something to deliver your goods, so that's not the real choice at all. The real choice is do you want to do it in a secure fashion where an indy developer can have a hit offering or do you want to deal with Wal-Mart and Best Buy who are going to promote whoever has the most money to spend on promotion and who are going to sell a disk that is going to get pirated and potentially cost you a lot more revenue than 30% in a secure app store.

Doomed because you assert it... I'm not sure why people think that their assertions are statements of fact. The statement isn't even worth responding to beyond saying if you don't like Metro don't use it... Macs, with the traditional field of static icons on a desktop aren't hard to find. Linux is supposed to be the next Windows. I use Metro on my PC every single day and don't want to go back to starting on the desktop. If others are so put out by having to click the desktop tile then they should find another product that doesn't have it rather than trying to take the choice out of the market completely.

Sam Trutna
Sam Trutna

 That number doesn't actually mean anything. 100 million downloads of what? How much of it was profit? How many of those were for serious computing? How many of them were from third party developers? Was it all software or does that include consumable media? If it does include consumable media, what percentage does that represent? You're clinging to a number of downloads as if it means anything on its own.

Josh
Josh

I disagree Sam. Why change? Because in general developers are simply not massively successful as you say. Only a select few large companies are. But even those companies would gladly give up current distribution channels for an app store because of the the  extended reach and impulse buy convenience. Would I give up 30% of my profits to reach 100% more customers? Who wouldn't?

Apple has shown the model works for software vendors and users on the desktop and phones. The Mac app store hit over 100million downloads in less than a year.

Sam Trutna
Sam Trutna

 Ok? That's via App stores, FOR PHONES. The transitive property isn't applicable here. Power users will avoid app stores, that's a huge chunk of the market for powerful software, like it or not, resist it or not. You're also acting like getting software is difficult under the status quo. Give the larger developers the option of a free open system for distribution and a closed, regulated system where a huge chunk of their profits are taken, which do you think they'll choose? They're massively successful with the current system that requires them to surrender exactly 0% of their profits to MS. Why change? Metro and the windows store are doomed on the PC unless MS keeps them on life support with first party software.