Vista Outlook Not as Cloudy?

Bill Gates is more Daddy Warbucks than Little Orphan Annie, but his new
mantra might well be “The sun will come out tomorrow.”

The software-spending picture for the rest of 2006 is considerably brighter
than it was three months ago, and Microsoft has the most
reason to be pleased, according to results of a quarterly survey of
corporate spending intentions conducted by Merrill Lynch.

A significant majority of executives responsible for IT spending at their
companies said they will spend more on software in 2006 than they did in
2005.

Only 47 percent of those surveyed made the same claim in January,
compared with 59 percent in the new survey, conducted in July.

The survey also showed Microsoft holding onto or solidifying its traditional
strengths while posting significant gains elsewhere.

It even showed the Redmond, Wash., software vendor overcoming missteps
related to its Vista launch.

Fifteen percent of executives said they plan to upgrade to Vista in 2007,
compared with just 8 percent only three months before.

Another 19 percent plan to upgrade in 2008, versus 13 percent in the
previous survey.

The Merrill Lynch analysts attribute this improved outlook to the fact that
customers are less worried about Vista release dates.

Less than half (39 percent) of respondents said they were waiting
for clarity around Vista and its launch, compared with 75 percent in April.

Perhaps the most startling aspect of the survey is Microsoft’s surge in
mindshare in the burgeoning field of service-oriented architecture (SOA) .

A whopping 80 percent of executives pegged SOA as the “next big
thing” in enterprise software.

CIOs were asked to name three companies as their SOA vendor and rank them
one through three.

Microsoft was the overwhelming favorite, with 33 of 79 votes ranking them
No. 1, versus 23 for IBM , 16 for Oracle and 13 for SAP .

IBM had held the top spot in Merrill Lynch’s previous survey.

This new result must be particularly galling to vendors such as IBM, Oracle
and BEA Systems , which have been foremost in banging the
drums for this technology.

Microsoft also surprised analysts by taking the top position in database
spending intentions, overtaking Oracle for the first time.

Sixty percent of respondents said they would spring for Microsoft database
software, compared with 52 percent for Oracle.

The analysts noted that this figure could be a reflection of the timing of
the survey, which coincides with Oracle’s seasonally slow quarter.

“This is not enough information to call a trend, but we will
continue to monitor this reversal in the future,” they wrote.

The near-term horizon is rosy for Microsoft in other areas, as well.

Microsoft remained the dominant player in the middleware category and
“appears to be gaining share… versus the more established players,”
including IBM, BEA, Oracle and TIBCO .

However, desktop OS and applications might be one area where dark clouds
might be gathering for Microsoft.

Spending intentions in these categories declined to 17 percent, down from 26
percent in the April survey and from 24 percent in January.

This “could
suggest lower than expected interest in Microsoft if the trend continues,”
the analysts wrote.

Merrill Lynch surveyed 100 senior North
American executives with direct purchasing authority, mostly representative
of the manufacturing, financial and services industries.

Fifty-nine percent
of respondents headed up spending for companies with more than $1 billion in
revenues.

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