After a Quarter Century of Windows

Twenty-five years ago this week, a youthful Bill Gates stood on stage at New York’s posh Helmsley Palace Hotel to announce the future of computing: the Windows 1.0 operating system.

Later that month, Gates would take the stage at the Comdex show in Las Vegas to proclaim that the future of computing was with Windows and the graphical user interface (GUI) that Windows introduced to PC users.

Gates turned out to be right on his initial premise, although it would be years before it achieved market momentum, and more years after that before Microsoft gained the dominance it enjoys today.

Today, Microsoft (NASDAQ: MSFT) is not only the largest software company on the planet, but it is also dominant worldwide.

It is also facing trends as precarious as it was a quarter century ago, as it struggles to convince customers and developers to look past the tepid response to Windows Vista and instead to embrace Windows 7 as well as Microsoft’s emerging “cloud” computing initiative and its “Azure” development platform.

Take the comments by Ray Ozzie, Microsoft’s chief software architect, at
the PDC conference last month. He described the company’s cloud initiative as the “fundamental transformation of the company toward services.” If successful, it will change the future of Microsoft and long-term may doom the company’s sacred cow – Windows.

With those two 1983 launch events, and others in later years, Gates and Microsoft almost single-handedly created the concept of vaporware, the practice of pre-announcing products before they were finished (although it could be argued that IBM originated the approach). Microsoft’s embrace of the graphical user interface also started the wheels in motion for years of bad blood among itself, IBM and Apple (NASDAQ: AAPL).

Indeed, Apple eventually sued for copyright infringement over Windows. Although Microsoft won, the episode led to the conventional wisdom that Microsoft couldn’t innovate but was great at copying other companies’ work. (Microsoft, after all, had already quietly written the first applications for the then soon-to-be-unveiled Macintosh computer, which would make its debut with the famous ‘1984’ ad during the 1984 Super Bowl a few months later.)

While Gates was right about the importance of GUI, he missed completely on two other pronouncements. First, he promised that Windows 1 would ship by April 1984. It actually took until late 1985 to ship – the vaporware label would come later after Microsoft began routinely promising software on deadlines executives must have known it couldn’t meet. (Apple, meanwhile, shipped the first Macs in 1984 right on schedule.)

He also predicted that Windows would attain a 90 percent market share by the end of 1984. On that prediction, Gates was off by ten years or more, but Windows retains its dominance to this day. In fact, Web statistics tracking firm Net Applications latest figures show Windows (all versions) with 90.46 percent market share for operating systems.

It hasn’t been easy.

“Windows had a difficult birth,” Rob Enderle, principal analyst at the Enderle Group, told InternetNews.com. “At the time, people thought that GUIs were for children, but Microsoft eventually convinced the market that it was the future,” Enderle said.

What a long strange trip

Microsoft finally delivered Windows 1.0 in late 1985, but despite a version 2 and a couple of ‘point’ releases, it mostly languished because it was crude by contemporary standards, required more processor power and memory than was standard, and relied on Microsoft’s chief operating system offering – MS-DOS.

“They [early releases of Windows] were rudimentary, to say the least; just a shell on DOS,” Tim Bajarin, president of Creative Strategies, who attended Gates’ keynote at Comdex 1983, told InternetNews.com.

Page 2: Windows 3 and beyond

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The market suddenly exploded in May 1990, however, with the introduction of Windows 3, which finally overcame many of the obstacles to it being a useful GUI, part of which had to do with leaps in processor power and plummeting prices for memory. Additionally, Microsoft released a version of its Office productivity applications suite, heretofore only available on the Mac, written specifically for Windows 3.x, giving users a productivity-driven reason to want the system.

In 1993, Microsoft also released Windows NT, which grew from a different code family tree – a 32-bit operating system designed as a server for corporate environments. The original release was numbered NT 3.1 and it eventually led to NT 4 and Windows 2000.

“Windows 3 is when Windows really started to matter, but NT is when they finally got it right,” Steve Gillmor, editor of TechCrunchIT and host of the Gillmor Gang podcasts, told InternetNews.com.

However, until the advent of Windows 95, Windows would still require DOS under the covers to provide operating system functions. Windows 95 was a full-fledged OS built on the 3.x code base. With its hybrid architecture, it also ushered in the move away from 16-bit operating systems to 32-bit systems.

The Windows 9x line yielded follow on systems, notably Windows 98, 98SE, and finally Windows Millennium Edition (ME) – the latter of which was generally viewed as a failure that didn’t offer enough to get users to upgrade from Windows 98..

A shotgun wedding

That was followed by the release of Windows XP in late 2001. Although the merger of the two code bases – Windows 9x and NT 4 – had begun with Windows 2000, XP aimed to finish the job.

Then the long wait began. For myriad reasons, not the least of which was so-called ‘feature creep,’ it would take five more years before Microsoft would deliver Windows Vista. This wasn’t the result of intentional vaporware, though, but rather a development process that got out of hand.

In fact, Vista was delayed repeatedly and finally Microsoft started tossing key features out – including the highly touted Windows Future Storage or WinFS – in order to be able to get Vista out the door.

Vista finally shipped to corporate customers in November 2006 and to consumers on January 30, 2007. After all the build up, however, both corporate users and consumers greeted Vista’s arrival with a thundering “Ho-Hum.”

The complaints poured in. Vista’s cool new graphics cost so much memory and processing power that at least one firm benchmarked it as being as much as 40 percent slower than XP. Additionally, in trying to more closely fit editions of Vista to different customer groups, Microsoft released five different editions.

“They started to lose track of where they wanted to go so they had a ‘SKU’ [stock-keeping unit] explosion and confused customers,” Enderle said.

So many customers were nonplused by Vista, in fact, that after Microsoft cut off direct sales of XP in June 2008, many PC makers continued selling machines with Vista and a ‘downgrade’ license that let them install XP instead. Dell, for one, has said it plans to offer downgrade licenses through 2009 and possibly into 2010.

Windows 7 a lucky number?

While some critics have declared Vista an abject failure, however, Microsoft claims to have sold more than 180 million Vista licenses. The problem, of course, is that many of those licenses may actually be for XP.

Still, not all analysts are ready to write Vista off, even with Windows 7 waiting in the wings. Even if only half of them are bona fide Vista installations, that’s still a lot of units.

“I’m not comfortable labeling it an unmitigated failure,” Michael Cherry, analyst at Directions on Microsoft, told InternetNews.com.

However, Vista clearly did not offer enough new to attract users away from XP and, so far, many users – both corporate and consumer – are sticking with XP while they wait to see how Vista’s successor does.

Page 3: Windows 7 — and a pressing concern

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Microsoft is readying Windows 7 for shipment in mid- to late 2009 or early 2010. In many respects, it is a cleaner version of Vista and provides faster response from the user interface, one of users favorite gripes about Vista. Microsoft is hoping that version 7 will break the Windows logjam.

With Windows 7 Microsoft has another dilemma. Most new PCs today are 64-bit systems and, to use more than 4 GB of RAM, require a 64-bit operating system. Microsoft has offered 64-bit editions of Windows since 2005 when it released XP x64, and there is also an x64 edition of Vista.

However, in the past few months, sales of the x64 edition of Vista have begun to outstrip sales of Vista x86. Due to a lack of some 64-bit device drivers, Microsoft officials have been beseeching developers to write 64-bit applications and device drivers for the upcoming Windows 7.

Windows’ last hurrah?

Besides Windows 7, however, Microsoft is also readying its so-called cloud computing initiative, which aims to provide many applications functions as services remotely via giant data centers the company is building around the world.

It remains unclear whether cloud computing will eventually kill off Windows, and long-time observers disagree with each other.

“There are threats on the horizon and that includes how much OS people need as they move to network-hosted applications,” Cherry said. Among those threats is more use of applications on mobile devices such as Apple’s iPhone, as well as network hosting technologies like Azure.

Another threat is time itself. Users waited five years for Vista and will wait another two years from Vista’s launch for Windows 7. It may be that, along with the growth of cloud computing, the next release of Windows after that may be a long wait.

“The release of Windows 7 very well could be the last release in the next ten years,” said Enderle. “And Azure may be dooming Windows as we know it,” he added.

That’s far from a universal viewpoint, however.

“PCs [and thus Windows] are not going away any time soon,” Bajarin said. He agrees that doesn’t necessarily guarantee a place at the table for Windows long-term though. “While I do think that Azure will be a part of it [future computing], at best that’s five years out and I wouldn’t be surprised if it’s a full seven to ten years out,” he added.

In the meantime, keep an eye on Ozzie, Gillmor says. Gates hired him to keep the ship on an even keel before he retired, even as Ozzie steers the company through uncertain waters. And with a technology leader like Ozzie, whatever happens will be not come about by accident.

As evidence, Gillmor cites Ozzie’s ‘Internet Services Disruption’ memo where he first spelled out his software-plus-services strategy in 2005. Since he was appointed chief software architect, in fact, Ozzie has made a lot of changes that are only now becoming apparent.

“What we’re seeing today is the stability that Ozzie has achieved since he turned the ship,” Gillmor added.

Microsoft was not available for comment before publication.

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