There is no doubting the importance of Windows Vista, formerly known as “Longhorn” and the successor to Windows 95 through XP, as it forms the foundation for Microsoft’s future fortunes just as its predecessor did for the company in years past. Vista will be Microsoft’s strongest response to competitive pressure from platforms like Linux and the Mac OS.
For buyers, the Vista platform has been a long time coming. Originally anticipated for 2004 release, it is now running two years late. You have to admit, there are few companies that could survive a two-year slip for a critical product like this.
We won’t know whether this product is a success or a failure for sure until after it actually launches, and I’m not willing to make the call right now because there are clearly a lot of issues that need to be decided. So I’ll spell out two scenarios, one where it sets records and one where it fails miserably. Realize, it probably will fall someplace in between, but this will offer some indicators to watch for so you can determine, early, hopefully, which way the dice are going to roll.
Let’s start with failure, then success:
If Windows Vista is a Dud
This wouldn’t be a new experience. Windows ME was a dud, and most of us can recall Microsoft Bob as a platform that didn’t exactly set the world on fire either. Currently IT buyers are not too excited about Vista, and we are not tracking any budget activity supporting a 2006 ramp-up in big business as a result of its release. Press coverage has been lukewarm at best so far, and it has seemed like every compelling feature that this product was to have had has been removed. This sets a baseline of negative perceptions that create a foundation for failure that is unprecedented in my experience.
I honestly don’t see either Linux or Apple benefiting much from this failure unless they change dramatically: Linux to a single, widely supported desktop distribution and Apple into a company that will listen and respond to business needs. Both seem too unlikely to speculate on at this point.
One of the foundations for Windows’ success in the past has been a closely coupled Office product. But these days Office for the Mac is better coupled to Apple than Office is to Windows, so there is little help expected from that quarter.
The best early indicator will be if corporate budgets are not adjusted in 2006 for a 2007 deployment on a large scale. If corporations hold in 2007 they are undoubtedly holding for something else at that point, and Microsoft may see a broad and significant drop in share and revenue. That would be a disaster with broad erosion across a number of product lines. This would define, for all time, probably, the word “dud.”
If Windows Vista is a Killer Product
Corporations have a lot of lead time, but consumers move on the event. And Windows 95 was largely driven by consumers into the business realm. If Windows is to be seen as a killer product, the consumers will be the key indicator of that success. Typically, they won’t get excited until the year of release, however, and this excitement will be solidly connected to Microsoft’s launch and sustaining marketing budgets. Microsoft has had large budgets before but has historically been very weak on sustaining marketing — this nearly killed Windows 95 which was showing strong demand a year before release.
Now, this lack of demand isn’t necessarily a bad thing. As demand for a new product goes up, demand for existing products goes down, which is part of the risk Apple took when pre-announcing the move to x86. Recent surveys indicate demand for Apple’s existing products is dropping like a rock as a result. Much of the PC industry depends on solid demand for Microsoft’s current platform, and were that to shift prematurely, they could quite literally stall the market. But demand has to exist at some point or no one buys. We must turn to those indicators for an early sign of the product’s success.
Windows Vista’s success, unlike earlier versions of Windows, would be largely driven by its major security improvements. Thus, it follows that a rapid ramp-up in security concerns coupled with a market stall could be an early indicator of strong demand for the system. Security remains a top three (often the No. 1) concern for corporate buyers and it is rapidly moving up the list of concerns for users, one in five of which will have experienced identity theft, if current studies are to be believed, by the time the product actually launches.
Like a tidal wave, a massive sales event is typically preceded by a market freeze and there should be no exception here. This market stall should occur in 2006 prior to the launch and sales during that time should favor platforms (largely 64-bit platforms) that fully support the OS. Given where AMD and Intel are on mobile products, AMD should take mobile market share from Intel at an increasing rate until Intel can launch a 64-bit mobile part if demand is building for Windows Vista, but not if it isn’t.
Success for Microsoft on this platform would restore a massive amount of confidence in the company particularly if it came after what is expected to be a clear win with the Xbox 360. The stock market should react to such an event very positively and the result should be a stronger Microsoft and a more loyal customer base.
Looking at a Likely Future
In the end it will come down to Microsoft and their partners’ ability to build and sustain demand. If they can’t — and either Linux or Apple can address their current shortcomings — they could lose share. This is unlikely. What is more likely to happen is that people will just stick with what they are running. Under that scenario it is very likely the press coverage for Microsoft will look a lot like the press coverage now does for Sun. If they can drive a massive sales event for Vista, Apple might take a significant hit, the PC market would get a lot healthier, and AMD, in particular, would get a nice shot in the arm. In addition, Microsoft gains back much of the positive image the company has lost, and, at least for a time, it would looks like the champion it once was and could be again.
Based on my experience with large firms, however, success is actually the long shot. For me this really feels like a repeating theme: As companies increase in size it often becomes more important for those in power to get the final say than to be successful. I’ve watched large company after large company make incredibly obvious mistakes and I am frankly very concerned that we are seeing the beginnings of another one of those situations. Still, Microsoft has come through in the past and is clearly capable of coming though again. Because so many depend on its success I just hope Microsoft has one more success left in it.
In the end, strangely enough, it will probably come down to the difference between doing what is right and the need for those in power to be seen as right. If you understand that one sentence you can probably explain why many large firms make bad choices.
Rob Enderle, a TechNewsWorld columnist, is the Principal Analyst for the Enderle Group, a consultancy that focuses on personal technology products and trends.