Vista Bites

Anyway, for many people, the title of this entry comes as no surprise (heh heh). But seriously, folks, the Vista debacle -- and that's really what it is now -- is starting to bite Microsoft in the...well, in the stock price, among other sensitive places.

Before we get to that, though, let's go ahead and get one thing out of the way: We were wrong, apparently, about Vista. Many are the times we've said right here in this newsletter that Vista would be the next XP eventually, that we'd all use it and come to love it and miss it when it gracefully bowed off the stage. We even said something similar in the more formal confines of RCP the magazine. And it appears that we -- along with a few analysts, although we should've known better than to agree with them -- were wrong. Sorry about that.

The enterprise hates Vista, almost in the same way that people "hate" a food they've never tried or a city they've never visited. That is to say that most people we know who have Vista actually kind of like it -- maybe it's an acquired taste -- but those who don't have it absolutely, completely, definitely don't want it. And despite Microsoft's many claims of Vista success, the avoiders, as far as we can tell, still greatly outnumber the accepters.

That's probably why we're hearing so much about Windows 7, the next version of the operating system, which Microsoft seems to be rushing to market in an effort to make up for Vista. We've already had limited demos of the new OS, even as Microsoft is still ostensibly trying to move us to Vista. Let's just say that the emergence of Windows 7 hype relatively early (perhaps very early) in Vista's intended lifecycle isn't exactly a subtle move on Redmond's part.

From a partner perspective, Vista's main cost has probably come in customer confidence; after all, not many enterprise partners make serious money these days by selling an OS. But they do sell Microsoft applications in an increasingly competitive and dynamic (no pun intended) environment, and when Microsoft trots out an Edsel like Vista as a long-planned, long-hyped major release, it doesn't exactly inspire confidence that Microsoft's other big products -- such as this year's batch of servers -- will be winners.

That might be (and probably is) unfair, as the new server team is mostly getting rave reviews, and new-ish products such as SharePoint have taken off very well indeed. Still, Vista's relative failure might make customers think twice about trusting ol' MS, and that's not a good thing in today's competitive environment.

For Microsoft, though, the cost of Vista has been higher -- much higher. And that's why we have an excuse to rag on it again today. BusinessWeek -- the best business magazine out there not named Redmond Channel Partner -- documents this week the fairly steep financial cost of Vista to Microsoft. The forlorn OS is taking a bite out of Redmond's revenues and stock price, and big, big businesses (think GM) are increasingly looking at passing it by altogether.

That's bad news for partners, too, as less money flowing into Fortress Microsoft will mean less cash trickling down to partners. More than that, the pressure is on Microsoft to execute now -- with Windows 7, with its critical SaaS efforts and with generally adapting to a rapidly changing (more rapidly now, we'd say, that in the last five years or so) software market.

Can Steve Ballmer, Ray Ozzie, Kevin Turner -- and, critically, not Bill Gates -- and their 80,000 or so colleagues pull it off? We'll see. Vista disaster or otherwise, we still wouldn't bet against them.

How much has Vista cost you, if anything? Send your thoughts to [email protected].

Posted by Lee Pender on June 12, 2008