Microsoft opens window on the future

Microsoft's future success is linked to the successful take-up of Vista, its latest operating system.

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The world of enterprise computing has shifted radically since Microsoft rolled out it Windows XP operating system with huge fanfare at midnight GMT on 25 October 2001: Linux is now a corporate standard; a new breed of competitors, such as Google and Salesforce.com have forced a corporate rethink on how software should be delivered; virtualisation technologies, blade PCs thin clients have presented the opportunity to dispense with the desktop PC altogether; and Apple has persuaded a whole new generation to sneer superiorly at their Windows-encumbered friends and colleagues.

So the November, low-key launch of Microsoft Vista – five years in the making and in beta test since mid-2005 - has left a lot of IT executives wondering just how the operating system and its complementary applications – Office 2007 and Exchange 2007– will live up to the promise implicit in the Vista marketing tag: ‘Get ready for a new day’.

Certainly, Microsoft knows its future success is linked to the successful take-up of Vista. Vista is, says Microsoft CEO, Steve Ballmer, the most complete operating system on the market; its release, alongside that of Office and Exchange, is “the biggest in the company’s history”.

But after decades of astonishing growth, its pace has begun to slow, with the traditional cash cows of Windows and Office – products that accounted for over 60% of the $10.8 billion banked in its latest quarter – looking under greater pressure than ever. But few would suggest that Microsoft’s domination of the software market is likely to come to an abrupt end.

"This is the biggest launch in the company's history."

Steve Ballmer, Microsoft

The company is solidly embedded on the corporate and consumer desktop, and as new PCs start to ship with the Mac-like Vista, that will progressively and inevitably become the standard. Indeed, far from marking the start of Microsoft’s demise, Vista heralds its ability to preserve the status quo.

One of the main ways Vista achieves this is by providing sufficient new and compelling features to keep its enterprise customers happy, says Michael Silver, a vice president of research, at market watcher Gartner. That will be particularly true for the numerous companies signed up to Microsoft’s Software Assurance licensing programme, which guarantees free upgrades for customers within the lifetime of the agreement.

Gartner believes that enterprise customers will inevitably upgrade to Vista – and Office 2007 – simply because the alternatives are not yet attractive enough. The pace of that migration may not be as fast as Microsoft executives would like, but it will be steady.

Improvements in security – particularly the ability to lockdown the desktop and remotely encrypt laptops – will appeal to many, Silver adds, as will Vista’s improved search technology.

However, in one way Vista marks the end of an era: Microsoft officials have openly admitted that it will be the last ‘big bang’ release of Windows in which the full code base is shipped in one vast download. And the seeds of that change are all already apparent. Alongside the latest version of Office is a teamworking utility, Windows Groove, the offspring of Microsoft’s 2005 acquisition of Groove Networks and its CEO Ray Ozzie (now Microsoft chief software architect). With Ozzie defining much of its software strategy going forward, Microsoft’s loyalty to the packaged software model will inevitably wane.

“Ray has set out a vision of how Microsoft can combine software and [online] services to ensure that all our software is more capable, richer, than browser only,” says Matthew Bishop, a senior director at Microsoft’s UK platform group.

Microsoft has barely started to persuade its customer base that software is most compelling when delivered as a combined desktop and browser-based product. But while Microsoft works on the flow of releases that will supersede Vista, its last great operating system launch should buy it some time.