Memo to Microsoft: ‘If I Were You…’

Where should the world’s largest software provider focus its energies?

During a week of Vista delays, Windows platform division shakeups and rumor-zapping over the fate of the next version of the Windows operating system and the Office suite, asked Microsoft experts to line up some advice for the software giant.

For starters, get the Windows Live strategy, Microsoft’s foray into Web-based applications, lined up, they said, while the Windows platform division reorganizes itself.

Second, they added, take some credit for the call — amid the howls of criticism over the move.

“Weirdly enough, Microsoft might get some advantage from this,” mused Charles King, an analyst with Pundit, a tech research firm.

King believes that Vista missing the lucrative Christmas period will hurt PC vendors, but that a delay based on security concerns could help its image.

“I don’t think Microsoft gets the benefit of the doubt that some of its competitors get in the marketplace because it’s seen as such a massive and complex organization,” added Peter O’Kelly, analyst with the Burton Group.

Mark Stahlman of Caris and Company said the delay highlights Microsoft’s greater emphasis on working with key partners and certifying security. “It’s a positive for Microsoft,” he said. “I think it’s been very much misunderstood.”

March Madness

If it was misunderstood, it wasn’t for lack of detail Microsoft poured into the technology industry in March, starting with the third-annual, invitation-only Blue Hat conference at its Redmond campus March 8 through 10th.

Among the topics discussed: exploiting Web applications and breaking into databases. The conference included a blog where attendees commented on the gathering.

Details are fairly sketchy unless Microsoft allows some session Webcasts to be posted to the Blue Hat blog. But the New York Times reported that Microsoft allowed security consultants -– the “Blue Hats” — to comb through Windows Vista searching for vulnerabilities. Jim Allchin, Microsoft’s outgoing co-president of Microsoft’s platforms and services division, reportedly called the outside screening the largest undergone by a commercial product.

A week later, Microsoft CEO Steve Ballmer was talking up the product roadmap and growth drivers during a New York appearance that included demonstrations of Vista and Office 2007.

The following week had Microsoft Chairman Bill Gates trekking to Las Vegas to woo hearts and minds of developers at the company’s Mix06 conference for Web developers. There, Gates unveiled a new beta of Internet Explorer 7, and acknowledged the software company can be too slow.

“In a sense, what we’re doing is saying, ‘hey, we waited too long for a browser release,'” he said, before jetting off to the Office 2007 developer conference in Redmond to talk up even more new features in the productivity suite.

If there was any hint of a delay then, it only came when Gates told attendees that he thinks the majority of people will upgrade both Office 2007 and Vista at the same time.

Then came the bombshell news from Allchin a day later, that commercial versions of Vista would be delayed until January of 2007. Next: a shakeup in the Platforms & Services Division (PSD) that put Steven Sinofsky in charge of Windows, and news that Office 2007 would also be on Vista’s consumer release schedule for January of 2007.

Aside from the palace intrigue over whether Allchin has effectively been demoted, some analysts said Microsoft did what it had to do. (A Microsoft spokesperson said Allchin will remain co-president of PSD and is committed to staying on until Windows Vista ships.)

Although Microsoft is sometimes seen as the “three stooges of marketing” where they never seem to get it right, Burton Group’s O’Kelly said the delays should not have been a surprise. Microsoft said it wouldn’t release the operating system until all loose ends were addressed.

With 50 million lines of code and enough features to inspire or infuriate every user, Vista turned into a six-year project, added Rob Helm of Directions on Microsoft.

Microsoft was right to raise Vista’s quality, but the company needs to spend less time integrating features and more effort innovating, Helm said.

What’s Next

Advice? Redefine how it communicates, especially about what Microsoft is doing with its Windows Live platform strategy, said Gartner’s David Smith.

“The whole Web. 2.0 platform is simultaneously one of the biggest opportunities and threats to them,” he said. “It’s a threat because of Ajax [which helps Web applications make fast updates to an end-user’s interface without reloading the entire browser page] and Google. And I’d say that the opportunity is to do the old ’embrace and extend.'”

As disappointing as he called the delay, Smith also had to give Microsoft some credit as well for “lots of capabilities that are Web 2.0 that they don’t talk about as such,” such as a new server-based Excel that’s coming out in Office 2007.

Sure, Google just bought Silicon Valley startup Upstartle, which makes Writely, a collaborative word processor that runs in a Web browser, but those capabilities are already in Microsoft’s Sharepoint server, he noted.

So where to look for growth?

Beyond the PC, said O’Kelly. “Not that the PC is dead.” Xbox and Origami, the Ultra Mobile Personal Computer (UMPC) platform it unveiled to make Windows computers as ubiquitous as mobile phones, all point to mobility as future growth for Microsoft, according to the analyst.

For others, the advice is to go back to the future.

“Vista is the future,” Stahlman added. “Microsoft is an operating system company and Vista is their product. Everything else depends on it and everything else hangs off it.”

Erin Joyce contributed to this story.

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