It turns out that we shouldn’t have worried that Thursday’s launch of Vista and Office (et. al.) was rather ho hum - there are apparently two more Vista launch events to come and that’s just in the USA. CEO Steve Ballmer says Microsoft will spend hundred of millions of dollars marketing Vista making it Microsoft’s most widely marketed product. Now instead of wondering about the apathy, one is forced to question the overkill. After all, as Carl Howe observes, Microsoft is a toll collector:
So what’s wrong with being a toll collector? Not a thing. It’s just like being a utility — it provides a consistent earning stream that should generate significant dividends. The only problem: Microsoft isn’t valued like a utility; it’s valued as a technology company with a price earnings ratio of 23, whereas utility companies tend to be in the teens. And its dividend yield of 1.3% is a far cry from the 2% to 4% of utility firms. And utility companies don’t devote seven billion a year to research and development either, nor do they launch me-too music players like Zune. They do, however, have an obligation to do maintenance on their properties, and that’s exactly what Vista and Office are: maintenance.
Other surprises from the launch included the revelation that there is no schedule for Vista Service Pack 1. There’s no schedule for the previously presumed dead WinFS file system technology either, but Microsoft now claims to still be working on it. And speaking of schedules, of the major security vendors, only McAfee has product ready for Vista.
But back to the fundamental question of how the new releases impact the transfer of loot to the Microsoft bottom line. As I have observed previously (and to continue the toll collector analogy), Microsoft can only increase the returns by catching those users who have been sneaking through without paying or increasing the amount that the lawful users fork over and now is as good a time as any to examine the state of play.
For the former, Microsoft CEO Sees Less Piracy With Vista and the Vista System Protection Platform “kill switch” certainly makes that likely. The new Genuine Advantage programs for Windows XP and Office also make it less likely that pirates will find any havens there, so Microsoft is making the choice quite clear: pay up or don’t use Windows/Office. Whether this translates into more paying users or a flight to free Open Source alternatives remains to be seen.
As for the return per unit sold to lawful users, Microsoft has laid the ground work for upselling enhanced versions of Vista, but it’s similarly unclear how successful and lucrative that will be. Mary Jo Foley elaborates in Will Vista prices be on a par with XP’s everywhere?
Even though the Windows Vista versions don’t match up exactly, feature for feature, with the comparable XP ones, Microsoft has held retail pricing fairly constant, officials have said. (And ditto for volume-license pricing, according to the Softies.)
Outside the U.S., however, it seems customers are going to be charged quite a bit more for Vista than XP, according to early data from Australia and Germany.
Microsoft officials are blaming local retailers for the mark-up.
So far, I haven’t seen data on how much PC makers are planning to charge for Vista systems here or abroad. And given that far more customers buy PCs with Windows preloaded on new systems than buy retail copies of Windows, those figures will be more of a true barometer of how expensive Vista will be.
While there is no clear answer on the per unit returns, everyone seems to have an opinion on uptake:
When Microsoft’s two most important products become available for businesses (the consumer version of Vista will be ready in January), adoption is likely to be modest at best. To some extent, that’s because companies are cautious about adopting new technology. They want to make sure new products work with existing systems. And they don’t want to disrupt employees who are accustomed to using what they have.
But Microsoft faces another challenge. Many corporate buyers don’t believe there’s enough pizzazz in the new software to increase their budgets to deploy new products right away. The Society for Information Management, a trade group of business tech buyers, polled its members in October and found that 58% haven’t decided when they’ll roll out Vista. Another 27% plan to do so in 2008 and beyond.
Office 2007 is unlikely to ramp up much faster. That’s because most companies are going to wait to install Vista first, since the new Office takes advantage of many of the new operating system’s features. At an October symposium, research firm Gartner surveyed corporate tech buyers representing about 3 million corporate PCs and found that just 20% would deploy Office 2007 before Vista. Another 38% said they’d roll out both products simultaneously. And 16% said they’d wait and adopt Office 2007 after getting Vista out to employees. That suggests the vast majority of rollouts will come in 2008 and beyond.
As usual, however, ordinary consumers will be the early adopters – Microsoft Windows Vista to Gain More Ground with Consumers than Enterprises in 2007, Says IDC:
During calendar year 2007, Windows Vista Home products are projected to account for 90% of new Windows client operating environments deployed by home users. By comparison, Windows Vista Business and Windows Vista Enterprise will account for 35% of the new Windows client operating environments deployed by business users. During the second full year of availability, Windows Vista Business and Windows Vista Enterprise will grow to account for 80% of new deployments.
The crystal ball then is typically foggy, but it’s clear that not much is going to happen until consumers can get their hands on Vista and that story won’t unfold until February.
With the announcement of Bill Gates’ planned departure, there was speculation as to the fate of some his pet projects including the perpetually elusive WinFS (“Windows Future Storage”) file system. Well, the other shoe has dropped and WinFS is no more per Quentin Clark’s post on the WinFS team blog (which is also what you get when you head over to Microsoft’s official WinFS Web page):
It’s these storage innovations that have matured to the point where we are ready to start working on including them in our broader database product. We are choosing now to take the unstructured data support and auto-admin work and deliver it in the next release of MS SQL Server, codenamed Katmai. This really is a big deal – productizing these innovations into the mainline data products makes a big contribution toward the Data Platform Vision we have been talking about. Doing this also gives us the right data platform for further innovations.
These changes do mean that we are not pursuing a separate delivery of WinFS, including the previously planned Beta 2 release. With most of our effort now working towards productizing mature aspects of the WinFS project into SQL and ADO.NET, we do not need to deliver a separate WinFS offering.
Since WinFS is no longer being delivered as a standalone software component, people will wonder what that means with respect to the Windows platform. Just as Vista pushed forward on many aspects of the search and organize themes of the Longhorn WinFS effort, Windows will continue to adopt work as it’s ready. We will continue working the innovations, and as things mature they will find their way into the right product experiences Windows and otherwise.
If you’re having a hard time parsing this, refer to Robert McLaws:
Ok, well what he actually said was they broke up the project across different products, and some day they’ll go into Windows, etc.
Hey, I chug the Kool-Aid from a freakin beer bong here, but even I have to say that Microsoft’s putting a PR spin on this albatross that probably isn’t going to fly. “it’s not dead… it lives on in productized form in Katmai!” Yeah, and Bob lived on to become Clippy.
Read McLaws’ whole post, because his major point is that WinFS was supposed to be a relational file system, not these two ancillary features. Touting the fact that you found these features in WinFS and are slapping them on SQL Server is rather like picking through a fast food dumpster and marveling that you found 2 French fries (my analogy, not his).
Of course, aside from the years of WinFS disappointment, it’s also had a pernicious effect on other Microsoft products. Microsoft’s Dare Obasanjo:
So that’s it, no more WinFS. This is the right decision, albeit two years too late but better late than never. It’s sad to think about the projects that got killed or disrupted because of WinFS only for this to happen.
The poster child for such a project has to be Windows Vista which had to drop WinFS in the famous Vista “reset” of 2004, despite it being one of the three original Vista technology “pillars.”
Update 6/26: More from Dare Obasanjo here.
Update 6/28: Quentin Clark has an revised announcement here.
Vijay Bangaru has the story at the WinFS Team Blog:
MSDN subscribers can now download our Beta 1 Refresh release. This release contains the same functionality of our original Beta 1 release and runs on the final release of the .NET Framework 2.0.
Unsuprisingly, you have to delete prior betas of WinFS, VS 2005, and .NET 2.0. Details by following the link.
Elizabeth Montalbano at InfoWorld:
Microsoft has shuffled members of the team responsible for its Microsoft Business Framework (MBF) because the technology itself has been parsed out to several different products, a Microsoft executive said Thursday.
Satya Nadella, corporate vice president of Microsoft Business Solutions, said about 200 people who were developing the framework, which was initially intended to bring model-driven development to Microsoft’s business applications, were affected by the change. Model-driven development is a way of designing software that aims to boost developer productivity by emphasizing thorough application modeling before any actual coding begins.
While some of that was intended with MBF, I believe the basic idea was to provide a framework of basic business functionality that application developers could use to avoid serial reinvention.
About half of the MBF group remained where they were in Microsoft’s Platform Products & Services Division, while the others were transferred to Microsoft’s Business Solutions group within the larger Microsoft Business Division, he said.
In their new roles, the former MBF team members will continue developing their framework technology for different product teams, Nadella said. Though Microsoft originally conceived MBF as its own entity, several products, including Microsoft’s Visual Studio toolset and Microsoft Office, will now include components of the framework.
The next generation of Microsoft’s ERP (enterprise resource planning) and CRM (customer relationship management) applications, the Dynamics family of products, also will include technology originally intended for MBF.
MBF has had a checkered history because of its tight dependency on Vista, WinFX, and WinFS with the concomitant delay. Some background is in an older report from Joris Evers at Techworld and a blog post by Tim Brookins.
Update: Mary Jo Foley has more.