HP Makes Windows 7 the 'Classic Coke' of OSes

Hewlett-Packard is trying to stimulate PC sales by offering consumers desktops and notebook PCs running the Windows 7 operating system rather than the maligned Windows 8. The move is akin to the Coca-Cola revival of its original formula. Can it produce the same results?

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New CokeHewlett-Packard Co. is doing something Coca-Cola tried back in the 1980s: Revive flagging product sales by introducing a classic flavor. In this case, the secret ingredient is Windows 7, and the marketing disaster that precipitated the campaign is the much-maligned Windows 8.

HP, which saw PC sales fall by more than 12 percent in 2013, has started promoting Windows 7 desktop and notebooks to consumers to stimulate sales by offering a more familiar, desirable operating system.

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The marketing campaign is being seen as evidence that Windows 8 is among the worst product launches in Microsoft’s history and a major contributor to the 10 percent decline in PC sales last year.

Windows 8 was introduced in October 2012 as the first Microsoft operating system that spanned the desktop and tablet worlds. It was designed to compete against rival Apple Inc. and Google Inc. products. Unfortunately, users have found the OS and its tiles interface to be unwieldy. Businesses in particular have bemoaned the loss of the desktop and Start button.

The market share numbers speak to the Windows 8 problem Microsoft and its PC partners face. Windows 7 is arguably the bestselling operating system, as it’s loaded on 47.5 percent of the install base. Windows XP, introduced in 2001 and coming to its end of life in April, continues to hold nearly 29 percent of the install base. Whereas Windows 8 and Windows 8.1 (the updated version) hold a scant 10.5 percent.

Internally, Microsoft employees reportedly refer to Windows 8 as “the New Vista,” which was predecessor to Windows 7 and widely criticized for its flaws and poor sales -- reminiscent of what happened with Coca-Cola back in the 1980s.

In the early 1980s, Coca-Cola was under increasing pressure by Pepsi. Market share of the flagship cola was down to 23 percent and Pepsi was outselling Coke in supermarkets. The presumption: Cola drinkers wanted something sweeter. So Coca-Cola decided to change its formula to make it more like Pepsi. The result was New Coke, launched in 1985.

New Coke was an unmitigated disaster from the start. Loyal Coke drinkers revolted. Sales plummeted. Coca-Cola raced to return its old product to the shelves under the brand “Classic Coke.” Guess what happened? Classic Coke sales skyrocketed. So successful was the relaunch of Classic Coke that many speculated the entire New Coke launch was just a ploy to simulate sales.

Coca-Cola continued to market both versions of its soda for eight years. New Coke sales never amounted to much, and by 1992, it was virtually gone from the shelves. (Around the same time, Coke and Pepsi introduced “clear” versions of their flagship products, which another disaster for another time.)

The same effect could happen with the HP campaign. Users -- particularly businesses -- want Windows 7 more than Windows 8. While Windows 8 is a touch-enabled operating system, many PC owners see Windows 7 as having greater utility and a complement to their mobile platforms -- most often Apple iOS and Google Android.

PC vendors and VARs continue to sell PCs with Windows 7 loaded or with downgrade licenses. Many resellers tell Channelnomics their PC customers simply reject Windows 8 products and discount the ability to upgrade to Windows 8. In 2013, PC sales through the channel increased 14.5 percent, almost all with Windows 7-based products.

Speculation is Microsoft will pull its own “Classic Coke” trick in 2015 when it introduces Windows 9, which many expect will have many of the features business and consumer users appreciated in Windows 7. If HP’s campaign is successful, it will arm Microsoft with more justification for looking back in time for improving the future.

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