I’ve spent a bit of time with Windows 8 and there’s definitely things to like about it. I delivered my initial verdict just about a year ago: it’s got some nice eye candy, but the Metro + Windows 7 sandwich is disorienting. I’m focused on the ways Windows 8 is different than its predecessors, so I’m not the audience that’s going to be using it.

There’s been a steady stream of Windows pundits weighing in on Windows 8 “layering issue”, but in terms of overall impressions, Michael Mace has a long, but thoughtful piece over on his Mobile Opportunity blog that paints a pretty meh picture for Microsoft’s  prospects. In what may be the most succinct boil-down in TMA history, this is what I believe will be the biggest problem for Microsoft – in Mace’s words:

An existing Windows user can’t just sit down with Windows 8 and start using it.

When Apple affected its transition to OS X, a lot of things about the desktop experience changed, but the central metaphor remained intact. With Windows 8, the metaphor is intact, but it lies buried beneath a layer of Metro gloss that will certainly be disorienting to existing Windows users. And let’s be clear here: Microsoft isn’t winning hearts and minds with new interfaces – “winning” for Microsoft is making things the “same enough” for people locked into their ways of doing things not to mutiny and move to a competing OS. By doing things like removing the Start menu and relegating the traditional Windows desktop to an underpinning, Microsoft is introducing a tectonic shift in the way things get done on a PC. This isn’t going to bode well for adoption.

Apple has always been a company where the designers told the engineers what to do and that expectation has – within the last 5 years – served the company very well. Microsoft has always been a company that iterated its offerings by doing things just different enough not to break legacy users’ experience. I understand the need for Microsoft to be competitive in the tablet space, but letting the designers of that aesthetic run amok and pave over the Windows Desktop is not the way to go about it. It may look nice, but people who appreciate that are already using Macs.

One of the lynchpins of the Department of Justice’s assertion that Apple was responsible for colluding with publishers to drive up the price of ebooks is that there was a competitive market prior to Apple’s entry defined by Amazon’s $9.99 price point for new releases and bestsellers. From paragraph 92 of the DoJ complaint:

Prior to the Defendants’ conspiracy, consumers benefited from price competition that led to $9.99 prices for newly released and bestselling e-books.

Apple pretty capably demolishes this myth in their response:

Apple denies that the $9.99 price level referenced in paragraph 92 was the result of “price competition.” Rather it reflected a strategic pricing decision made by Amazon, with a 90% share of eBook sales, made almost exclusively to consumers who had purchased Amazon’s Kindle eReader.

There’s been a lot written about Amazon’s business model recently. Most of it focuses on how little money they make and how a company with a P/E of 174 could be valued so high. The prescient former Apple CEO Jean-Louis Gassée has a theory that he lays out in his Monday Note:

After having cleared the field, Amazon will take advantage of what is delicately called “pricing power”. As the Last Man Standing, they will raise prices at will and regain profitability. This isn’t Amazon’s only game. The breadth of their offering, their superior customer service and awesome logistics, make life difficult for poorly managed competitors such as Best Buy, or the undead Circuit City, to name but a few companies whose weaknesses where exposed by Amazon’s superbly efficient machine.

But traders recognize the wink and the nod behind today’s numbers, they are willing to pay a high price for a share of Amazon’s future dominant position.

The point about Amazon’s “future dominance” is underscored by their profitability, which is illustrated in the Monday Note piece by a chart taken from Seeking Alpha:

Amazon's margins - prior to the other shoe dropping

So you have a market juggernaut artificially keeping prices down while reaping an unsustainable margin, ostensibly to drive out competition before using this leverage to raise prices in the future. Part of this strategy was selling select e-books at a loss for $9.99 until Apple entered the market. If you look at the grain of one particular tree’s bark, like the DoJ does, this is “bad” for the consumer. If you pull your camera back a couple of feet, you can see what Amazon is doing – and what the DoJ should be addressing. Even for the government, this degree of myopia would be funny if it wasn’t so damaging. But by all means, waste taxpayers’ money going after the wrong party.