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Is Microsoft Gambling Away Its Windows Empire?


Opinion - Some days just don’t turn out in the way you expect they would. In the case of Bill Gates and Steve Ballmer, their appearance at D6 and a demonstration of a multi touch interface of Windows 7 created lots of feedback from the media, but probably not quite the feedback they expected. Considering the critical voices surrounding Windows Vista, Windows 7 needs to deliver in every perceivable way. And even if Microsoft is very careful about giving out details about the new Windows, there appears to be a growing disappointment over what Windows 7 might or might not be. Can Microsoft afford another Vista?

Let’s be realistic. Microsoft is in a very comfortable position and Windows remains a castle no one has been able to dent since the software has become popular in the early 1990s. Microsoft expects that the installed base of Windows will have grown to more than 1 billion PCs worldwide by the end of next month. The client software business alone (which includes Office) brought in more than $4 billion in revenue and more than $3 billion in profit in the last quarter. By any standard, Windows Vista is selling like sliced bread, more than 100 million times within the first year after launch, which, admittedly, is due to the fact that pretty much every PC you buy today comes with software by default.

But there is an undeniable disappointment over Windows Vista in the market, which even Gates and Ballmer admitted yesterday. Given the fact that it is pretty much a new operating system, the criticism is somewhat surprising to see - as is Gates’ remark that Vista has provided Microsoft with room for improvement. I won’t go into the flaws of Vista, I am pretty sure that most Vista users have their own preferences and their usage patterns impact what works and what does not work. I for myself compare Windows Vista to a Toyota Camry that runs on a 20 year old engine. It will get you and your family from A to B, albeit not in a particularly exciting way and while it does everything you expect from it, there is nothing that it does exceptionally well. Just like the Camry, it has received updates and a new look over time, but its overall appearance is relatively bloated today. Throw in a decades-old engine and you have a Vista-Camry.

A changing operating system market: An enthusiast tool that turns into commodity and loses its excitement

My journalism career began about 14 years ago and my first assignment was to assist my senior editor at the time with the Windows 95 introduction coverage. I was about as geeky as you could get at the time and loved my Windows 3.11/DOS 6.2 PC. There were far less PC users than today and if you ran into another PC owner, there was a good chance you were talking to another geek who had quite a bit of knowledge how DOS/Windows worked inside and out. This excitement carried over to Windows 95 with people waiting in line at midnight for the software to become available. Windows 95 is especially remembered for its driver disaster that followed after the launch. Though, outside businesses, few complained - this was the way you expected Windows to work, with all of its flaws.

In the following years, Microsoft recognized that a software that was difficult to handle would not become a product for everyone. Virtually every Windows presentation I attended carried the message that a Windows PC should be as easy to use as your TV. If you listened carefully to Steve Ballmer’s presentations at the Windows Vista launch last year, this was exactly the message delivered through Visa: Windows has become the software that just runs and enables you to access your pictures, video, music, Internet and everything else you would ever expect from your operating system. However, what happened in the process is that all those fancy features like Flip3D (does anyone actually use it?) and the fancy GUI, which was supposed to be Vista’s biggest selling point, became irrelevant. Vista is a foundation for the applications you want to run and Microsoft has achieved that goal in a way that few may actually care how Vista looks like. What counts for most of us is how quickly, convenient and effective we can reach our goals on any particular day.

At least for me, Vista and Office have not shown measurable improvements in how quickly or how effectively I can get my email; access the Internet, transfer and view pictures or anything else. Music, pictures and video tasks actually have been transitioned to a Mac in our family, not because I find Apple’s commercials funny, but because Macs are faster and Apple has found a way to make usually boring tasks a bit more enjoyable. When was the last time I actually got excited when I turned on my Vista PC?

According to Microsoft, the biggest consumer complaint with Vista apparently was its user interface. There is little we can we have learned to simply accept it the way it is. If you are truly unhappy with Windows, then you a choice: Go back to Windows XP and wait for Windows 7. In fact, I have noticed a volume of excitement for Windows 7 I haven’t seen with Vista and I believe that Microsoft has a huge opportunity with this release - to fix the Vista flaws and demonstrate that the company can still come up with those wow-features.

But anyone who has a similar purpose-based relationship with Windows like may have had a rude awakening when reading news this week. First, we learned that Windows 7 is merely two evolutionary steps above Windows Vista, the core will remain untouched and a multi-touch screen feature will be one of its key features. Expect a 2009 Vista-Camry. At least we were happy to hear that the information our source who suggested a 2009 release date was right on target.

Read on the next page: Chalenges and Opportunities, Conclusion

Challenges and opportunities

We know that Microsoft is much more careful about releasing new features, but after hearing Gates and Ballmer at D6, my initial reaction was: That’s it?

At least to me, the timing appears to be perfect to break with old traditions, throw the 20 year old Windows foundation (the concept behind it are more like 40 years old) out and come up with something new. Microsoft is facing more pressure than at any other time in its history within the next two years and I am surprised that the company would decide to continue building what is essentially and old product.

If you are looking into the near future and Microsoft’s recent history, one could imagine that Microsoft is running into the perfect storm in 2008/2009 and could be more vulnerable to competitors than it was ever before. Google has become too large and too fast in the Internet business for Microsoft to catch up anytime soon; Google has enough cash and the necessary following to attack Microsoft in its core businesses; a Yahoo merger would have been necessary for Microsoft to defend itself against Google; Apple is making in-roads in the mobile phone business, in the PC business and has taken control of the consumer electronics business from the IT perspective. Add to that that Bill Gates will be basically dropping out of the company this year and remove most of the charisma of the company’s leadership group.

Steve Ballmer can claim as often as he wants that Microsoft is selling its software on 290 million PCs every year, while Apple has only 10 million and he can keep re-affirming that Microsoft can grow its Internet business by itself to a degree where it can compete with Google. I just doubt that everyone will be satisfied with those answers. I just don’t think they are enough.

Windows always has been the core of Microsoft’s business and there is little to suggest that this will change. It is Microsoft’s market to lose and it is up to Microsoft to take advantage of opportunities while its seemingly endless source of sales is producing dollars.

With Windows 7, Microsoft apparently has identified as opportunities to play it safe, keep the Windows foundation in place, keep the current driver model, not to completely switch to 64-bit and introduce a multi-touch input interface a la iPhone. There may be more (hopefully!), but this is what we know for now. Not only does the multi-touch feature look a lot like what Apple has been doing, but I am not sure if this is really something that would really convince a lot of people to upgrade to a new version of Windows other than the fact that they have to upgrade when they buy a new PC anyway. Do I want to use my PC by touching the screen in front of me? Probably not.

However, there are clearly trends out there we are seeing every day. And, as it turns out, Microsoft is even working on a wealth of promising features in its research labs reaching from cloud computing solutions, security and performance advances that could completely transform the way we are working with computers today.

Singularity may actually be the vision behind a Microsoft operating system and a playground that may reveal a completely new Windows. The operating system is available as a research software download and probably won’t ever see the light of the day. However, the thoughts, ideas and solutions behind it are a different caliber than what Microsoft indicates Windows 7 will be. These innovations refer to a higher standard of security and acceleration features such as GPGPU support in particular. While we still have to figure out what GPGPU acceleration is really good for on a consumer PC, AMD already presented an application that can render a user’s hand that is recorded through a webcam in real time and allow a user to control items on the screen by simple hand movements - without having to touch the screen.

Other companies are using this technology for improved voice recognition (by combining audio recognition with monitoring lip movements) and Adobe has a working version of GPGPU accelerated image editing.

Current advances in hardware are taking huge leaps. I can’t quite believe that all we are getting out of this from Microsoft will be an evolutionary step above Vista.


Of course, anything that happens to Windows is highly speculative and only Microsoft knows for sure how Windows 7 will look like. And as of now, Windows is still an unbreakable bank that will finance Microsoft’s business for years to come. But Windows 7 appears to be a critical software release, given the company’s competitive pressure. If the competition is turning up the heat and Windows 7 will turn into another Vista, you don’t have to be an expert to predict that Apple will be seeing its market share rise.

So, can Microsoft afford another Vista? Financially, certainly. As a business foundation and a as tool to win back market shares against Apple and Google, probably not.

Share your thoughts by writing a comment below.

  • lopopo
    Windows has become stagnant and more derivative over time. Vista was kinda of mad dash to copy other OS's and what they were doing right. This evolution mirrors Microsoft as a company ( not fiscally but identity wise). So as it turns out nothing lasts forever and windows might fall of it's high horse. I like windows and hope it does not but it could happen.
    What should we take with us from all this? Well Windows became pupular beacuse it's GUI was simple and effective but could scale well with 3rd party software. Also the standartization that Windows brought to the industry really helped the PC grow as a platform. I personaly would like to have a very basic OS standardized across the board ( drivers and such) which comes with every PC sold. Then 3rd party software could be made to change this OS to the end users need. A body could oversee it's development and everyone would be happy beacuse they could change it's look and feal at anytime. Nevertheless my idea is a mixed bag and has many flaws ( but I like standarts).
  • Balshoy
    I can't wait to see the AMD hand movement recognition system at work... now for that I would pay big... imagine... being able to move things on a screen like a conductor, like Minority report... only better.

    Seriously now, touch-screens?... Just imagine having to stay with your arms stretched in front of the monitor... for hours... it's damn awful... minutes even and it's a big pain in the rear... neah... touch-screens are for good keyboards only. Hand gestures... now that's the future.
  • DXRick
    I for myself compare Windows Vista to a Toyota Camry that runs on a 20 year old engine.

    Are you refering to the PC hardware architecture (front side bus)? Being the Vista was written from the ground up, I don't understand the analogy. The kernel, driver model, and many other features are new.

    What I see as dated is the exterior, or body design. People (like my parents) find the file system difficult.

    "Where the hell is the file I just scanned?". "How can I send it as an attachment in an email?"

    I told him that he can right-click files and select Send To -> Mail Recipient. It is far from intuitive for many people.

    Being a programmer geek, it is easier for me to figure things out. It is still hard for the casual users (especially the baby boomers).
  • good article... but why does market share have to fall to apple??? how about linux???
  • dragunover
    No way would I pay for Apple...Unless they magically distribute their software,which doesn't treat you like a total DA.Which it does.

    I would much rather see an advanced Ubuntu computer,with Open-GL 3,and playing all my games on there,on my ISP that isn't a sadistical figure hiding behind my modem.
  • So Did you even bother to look at windows 7?

    and "another vista" comment ... 90% of the problems can be summed up with "stupid people, stupid hardware companies, and people unwilling to upgrade to new tech" none of those are microsoft's fault.

    It is people like the article's author that are to blame for the "vista problem".