Troubling vista for Microsoft

USUALLY a man known for his hyper-abundant energy, Microsoft boss Steve Ballmer looked relieved rather than pumped yesterday when he began his opening spiel at the double-whammy launch of Microsoft Windows Vista and Office 2007 at the tech-centric Nasdaq stock exchange in New York.

Office and Windows are the software cash cows that built the largest personal fortune in history for Microsoft founder Bill Gates and created a software giant so pervasive it is estimated that Windows sits on 90 per cent of the world's PCs. At the Nasdaq launch, Microsoft CEO Ballmer was pitching hard for that dominance to remain, in spite of the new code being as much as two years late to market.

"It's exciting to finally be here," said Ballmer, putting a big emphasis on the word "finally".

Vista is the much awaited replacement for the venerable Windows XP, launched in 2001.

It was first mooted for launch in 2004, rescheduled for 2005 and then finally slated for a full launch by Christmas 2006 - another deadline missed as the full consumer launch is now due early next year.

Its launch comes at a time when Microsoft is facing more serious threats to its business than at perhaps any other time since the launch of Windows 95 a decade ago.

Cashed-up market darling Google wants to bust up Microsoft's stranglehold on desktop computing with free browser-based word processing, spreadsheet and productivity software that lets people store their files online.

Then there's the free software competition from the likes of Linux and the open source desktop productivity initiative OpenOffice.

Kept on hold by the many delays and shifts in politics which are part of the scenery with Microsoft operating system

'We were working hard on a variety of new technologies but probably trying to do new things and integrate them together too quickly and just lost the cycle time'

ot;Then we did a service pack for XP focused on security in one year and then we did most of what you see in Windows Vista in about 2 1/2 years, drawing on some of the incubated technologies from before."

Ballmer appeared unfazed by the many competitors lining up for a slice of Microsoft's market share.

"We've been competing with free software for many years," he said.

"Linux has been in the market for many years, as has OpenOffice, StarOffice ... blahdy blahdy blah.

"Just because something doesn't have an upfront fee is no guarantee of popularity. You have to have something that is good."

He was even more dismissive of the Google software. "If a pretty good, free office package hasn't taken share, why would a less good package that violates your privacy and has less features do better?"

The so-called Business Value launch at Nasdaq this week was aimed squarely at corporate users that buy up Microsoft software in volume licensing deals.

When the flag falls on Microsoft's consumer launch on January 30, the continuing health of Microsoft's share of the consumer market is a given as almost every new name brand PC will ship with Vista by default.

Much harder for Microsoft is convincing business customers to move off the old Windows XP installations that many have struggled for years to make stable and secure and on to the brave new world of Vista.

The same problem applies to Office 2007 and, traditionally, business customers have taken years to do the switch.

Some are now only just switching to the obsolescent Windows XP.

From a profit point of view, Microsoft wants companies to move on to Vista and Office 2007 both for the incremental upgrade revenue and the revenue from all the new back-end software that accompanies the pair.

At the Nasdaq launch, Microsoft trotted out 30 new high-profit margin products associated with the Vista/Office 2007 release.

"This is by far the largest wave of products we've ever kicked off, all anchored around the most significant (Office and Windows) releases that maybe we've ever done," Ballmer said.

As well as Vista and Office, Microsoft has begun shipping the new Exchange Server 2007 email and messaging server, and a raft of other server platforms the company hopes will burrow into the fabric of business IT systems and tighten the company's grip on corporate computing.

These offer new features to tempt corporate users.

The new Office SharePoint Server 2007 that underpins corporate information portals can now search deep inside other vendors' enterprise applications, such as SAP's ERP (enterprise resource planning) systems that are fundamental to many large businesses' logistical operations, and Siebel's customer relationship management software, and drag out hidden details.

Corporations have been frustrated that they can search the vast internet more easily using Google than they can search their own systems, constructed using enterprise applications that are not easily accessible to Windows, and have internal search functions that are only available to select people within an organisation - the IT guys.

As an example of how this search could be useful, Ballmer offered up the example of an insurance executive who wanted to raise vehicle accident policies taken out before the Christmas holidays because he was sure potential silly season drink drivers were insuring themselves against mishap.

The executive was sure the data supporting this move was deep in his firm's corporate information systems, but he couldn't get at it. Ballmer believes the new search tools would have solved his dilemma.

A new feature likely to appeal to business people chained to their email inboxes is the ability to ring up the Microsoft Outlook email software, manipulate the inbox and calendar scheduling through voice recognition and "hear" email messages spoken.

It was in a demonstration of the new dial-in email server feature that Microsoft chairman Bill Gates, who is moving away from day-to-day management responsibilities and leaving them to Ballmer, made his only cameo appearance around the worldwide Vista/Office launch extravaganza. Gates's high-pitched voice appeared as the voice welcoming Microsoft officials who demonstrated the feature.

It will take more than fancy new features to convert corporates tired of dishing out money to rejig vast Microsoft installations just because Microsoft thinks it's a good time to move on.

There's a rule of thumb in IT management land that you don't install a new version of Windows or Office inside a company until at least the first, glitch-fixing service pack has been released.

Ballmer hopes the unprecedented beta testing of the pair - about 5 million pre-production trial versions of Office and Windows were downloaded worldwide - will speed up adoption.

As well as the upgrade costs associated with the software, business must shell out for the transition costs that arrive with major IT changes. These include staff retraining costs and the costs of loading up the new code.

Microsoft officials say the retraining effort with Vista and Office goes up depending on the user's expertise with the old software. Power users could take up to two weeks to get comfortable with the changes whereas unsophisticated users would only take several days to get their heads around the new releases.

Microsoft believes transition costs with Vista will be much lower than those that came with shifting from earlier versions of Windows to XP, but it would not quantify the costs.

Instead, business will have to rely on the experiences of early Vista adopters such as Westpac, which has decided to move to Vista rapidly. Microsoft has about 500 organisations worldwide looking to hitch up quickly with Vista and Office, with about 30 in Australia.

While Ballmer poo-poos freebies from Linux and Google, Microsoft has got into the free software game in a small way to push the new Vista and Office at the software developer community.

Microsoft is giving away free copies of Vista Business and Office 2007 Professional until February 28, 2007, through its Power Together program (www.powertogether.com). The offer is open to US residents who complete a series of webcasts or online lab sessions.

Unfortunately, Australians miss out on the scheme, which is only open in the US. A Microsoft Australia official confirmed the scheme did not apply here and Microsoft would only ship the gift copies to US addresses.