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On October 26th 2012, Microsoft (NASDAQ:MSFT) released Windows 8 to mixed reviews. The Operating System (OS) has not been received as a critical success or a flop. It's reception can be characterized as somewhere in the murky middle.

However, we have now started to hear very troubling and confusing rumblings about yet another Operating System update from Microsoft. The latest round of (pretty credible) rumors have given this upcoming OS update a codename - Windows Blue. Microsoft even seems to have confirmed this codename in a job posting earlier this month.

So what do we know about Windows Blue so far?

  1. Windows Blue is rumored to be an update to Windows 8.

  2. It is meant to re-orient the Windows OS to support major annual updates going forward.

  3. It will run on PC's, laptops, tablets, phones and possibly servers.

  4. It is meant to unify the Microsoft code base, so code written once can work across multiple devices.

  5. It will allow Windows to seamlessly adapt to multiple device screen sizes.

  6. It will bring a new version of Internet Explorer (11) with it.

  7. It will bring major enhancements to the OS search functionality.

  8. It will have major Microsoft Bing search integration.

  9. It is rumored to be free for licensed owners of Windows 8.

These are just some of the preliminary updates that are rumored to be coming with this new update as soon as this summer!

This is a good thing right?

While some people will see this new software development by Microsoft as a good thing and a sign of the company being aggressive and proactive, I disagree.

I believe that developing such a major set of feature updates to a brand new Operating System so soon has very little upside. It sends a mixed message to the markets about the previous OS release that (relatively) recently just hit the market. More disturbingly for Microsoft, the news has the potential to freeze potential customers who may instead choose to wait until the summer to see exactly what the impact of this new update is.

In addition, I agree with veteran blogger Paul Thurrott who says:

Fixing Windows 8 for the long term is easy. So easy, in fact, that even I was able to churn out several articles full of logical advice about doing so. And while some of these things could wait for "Blue," that coming release/update of Windows 8 (and Windows Phone 8, Server 2012, and the online services) that will ship throughout late 2013 and beyond, most of them need to happen much more quickly than that. So rather than applaud Microsoft for doing less more quickly, I'd like to prod them to do much less much more quickly, and on an ongoing basis. Again. I've been beating this drum since last year.

I think it's way more important to fix Windows 8 now simply because as Paul says, it's pretty easy.

Based on feedback from readers on my site, I was quickly able to generate a list of four simple fixes that would immediately make Windows 8 more attractive to consumers and businesses.

Woody Leonhard from Infoworld seems to concur when he says:

Tom Warren at The Verge adds, "one of the biggest changes [in Blue] is an improvement to the search charm functionality." I can think of a million ways Windows 8 needs to be improved, but somehow search charm functionality doesn't appear near the top of my list.

Windows 8 clearly has a bunch of minor fixes that could be fixed relatively quickly and deployed as minor updates. Now, I think that the one update that is important enough to be disruptive is the code unification update. This is the update that will make it easy for developers to write code once and have it work across many types of devices.

In my view, Apple (NASDAQ:AAPL), Microsoft and Google (NASDAQ:GOOG) will inevitably end up at this point in order to attract and keep the most talented software development community.

So what will the impact be to the company and stock?

I believe that this update will affect Microsoft stock negatively. I think this will be the case because a new update so soon after Windows 8 will be very confusing to the general public. Heck, it's confusing to most industry analysts I speak to off the record.

The general public and businesses will inevitably have some of the following questions:

Is it a new Operating System or a major set of updates to Windows 8?

If it is a new Operating System, then isn't it too soon after Windows 8?

If this is a major feature update, does that mean that users have to (yet again) learn even more new ways to navigate on the OS and be productive?

What does this mean for business users in the process of analyzing potential migrations to Windows 8?

Can users upgrade from Windows 7 or Windows XP? (at this point, it seems no)

Is it free or paid?

What was wrong with Windows 8?

Why weren't a bunch of these updates in Windows 8?

If users get Windows Blue, will there be another update in 8 months with even more new features?

Do users have the option to opt out?

Such a major update to Windows 8 so soon is cognitively dissonant from current Windows 8 advertising and has potentially negative implications.

The public doesn't trust a vendor that tries to promote a product it knows is in need of major updates.

As an investor holding MSFT stock or planning to buy, it's important to be aware that massive changes may be coming to the Windows Operating System.

It just might be a bumpy summer.

Source: How Microsoft's OS Update 'Windows Blue' Will Impact Investors This Summer

Additional disclosure: While I have no business relationship with Microsoft of any sort, I am the owner and editor of several Windows websites (Windows8update.com, Windows8enterprise.com, among others), and I write primarily about Microsoft for a living.