Vlad Mazek – Vladville Blog

Just when we thought Microsoft could not possibly lose any more direction as a business software publisher they find a way, in form of Equipt:

Initially code-named “Albany,” Microsoft Equipt offers consumers Microsoft Office Home and Student 2007, giving them the latest versions of Word, Excel, PowerPoint and OneNote for their personal and school projects; Windows Live OneCare, the all-in-one security and PC management service; Windows Live tools, such as Windows Live Mail, Windows Live Messenger and Windows Live Photo Gallery so they can connect and share with people they care about most; and Office Live Workspace, a new service from Microsoft that makes it easy to save documents to a dedicated online Workspace and share them with friends and classmates. Anytime a new version of Office or Windows Live OneCare is released, Microsoft Equipt customers will get the version upgrades as part of their subscriptions.

But is this just another distraction from the core Microsoft business, or is this a brilliant ploy to leapfrog the competition in the consumer space?

In short: Microsoft is trying to extend its desktop monopoly to include the Office and Service Subscription monopoly by bundling it’s Office Home, OneCare Antivirus and a bunch of freeware found on its web site. Why? The ploy to get OEMs to install a trial version of Office on brand new PCs backfired when customers realized they were tricked into using the new drug but didn’t quite want to pay for it! So they went back to the old releases.

This move does four great things for Microsoft:

1. It reassures the retail channel that it can continue to be relevant in the Cloud Services world because the package will be distributed in a retail setting leading to more store visits and ability to get some direct retailer IT services traction (Geek Squad, FireDog, etc)
2. It creates a proof of concept for Software-as-a-Service model for Microsoft, extending beyond the free ad sponsored software solutions that have by large been loss leaders for both Microsoft and Google.
3. It creates a track record of demand from the customers in the area where regulators are less likely to be skeptical of Microsoft’s actions. While this kind of a “bundle offer” would lead to immediate lawsuits if it included things like Exchange and SharePoint (which require other purchases and more complex licensing), not too many people seem to be focused on the consumer retail space where Microsoft can try out its “bundling” effect and later claim consumer demand, not anticompetitive greed, as the main driver.
4. It changes the licensing message from “Right to use” to “Install it on three PCs, we aren’t going to threaten you by calling you a pirate!”

All in all, good move Microsoft! I doubt anyone will notice what is really going on here.

Ever since 2003 TechEd we’ve been speculating on the time when Microsoft will be releasing a modern operating system to compete with the new lightweight offerings from the competition that are starting to pick up more steam. To see the details of the complaints and issues, check out this hit piece on Windows from NY Times, written with the anger you’ll only get on Vladville.

The situation is far simpler than both Microsoft and NY Times would have us believe though.

Microsoft is afraid of a complete system rewrite because every incremental step in evolution of Windows over the past few years has been met with severe resistance. First the 64bit move, which vendors were not ready for and did not have anything ready for. Then we had the security enhancements in both Vista and Windows Server. For Vista’s sake, it was just horribly implemented, everyone but maybe five people I know absolutely hate UAC to the extent that they have disabled it and shot the system back to the security level that even XP would cringe at. On the server side, Microsoft just doesn’t have the security reputation for people to trust it, and Forefront line of software is just never discussed as an option.

So, what is Microsoft to do? Sit back and roll out another dud?

Pretty much:

Last week, Bill Veghte, a Microsoft senior vice president, sent a letter to customers reassuring them there would be minimal changes to Windows’ essential code. “Our approach with Windows 7,” he wrote, “is to build off the same core architecture as Windows Vista so the investments you and our partners have made in Windows Vista will continue to pay off with Windows 7.”

This is why I am tuning into the Digital WPC to find out what they will say about the future of the platform that is crumbling. Microsoft, at least in PR terms, is taking the line of least resistance and trying to say that everything will be the same its always been (look how well that worked out for Vista after all, the sales are through the roof!) and it will be same ol’, same ol’ with just a few tweaks to sync up to the net.

I want to propose something else..

If the assumption is that the Microsoft monopoly on the Office and Desktop is strong enough to put another [explicit language string too long for the blog post] Vista version out, what about putting out a modern operating system out with the legacy compatibility running in a virtual machine?

It’s not going to happen, but after all, this is Microsoft, and it needs to do something big. If it intends to remain relevant that is.

This is the difficult question that everyone will be tuning into Digital WPC to find out.

With Microsoft’s now legendary Chairman Bill Gates heading off into the sunset, two men stand at top of Microsoft with clearly different agendas.

First, we have CEO Steve Ballmer known for ruthless acquisition, competition and enhancing shareholder value and customer experience with every move. This is the guy that wanted to buy Yahoo because he was convinced that Microsoft can’t do it on its own.

On the other hand, there is the Chief Software Architect Ray Ozzie, sitting in a role that Bill Gates had newly revealed conflicts with the Steve Ballmer’s direction for Microsoft. So here is my short list of questions:

What proof is there that both Ballmer and Ozzie can coexist, or even work together, to innovate Microsoft past its monopoly-empowered dominance that seems to be crumbling with each passing day?

Which one will take a point to the partners that the software world as we know it now, and the services industry that exists to support it in its current state, will cease to exist?

Who will be the face of the Microsoft accountability to the partners and customers, in the climate in which Microsoft solutions are seen as too expensive, too unreliable, too Vista?

Who will step up into the role of a developer evangelist, to reinvigorate developer community into finding Microsoft’s technology as sexy and unencumbered by the Microsoft’s ever-present need to control everything and flood the system with “me-too” instead of open integration with market leaders?

Where will Microsoft enable me to make money as a partner? If you are pushing for services, will I receive a cut from the subscription fees you will charge your customers to access your cloud service and access my applications for free? Will you be sharing your ad revenues with me to entice me to write applications on your platform instead of the one powered by AWS, Google or Apple? On the services side, will you continue to push solutions direct to our customers (OneCare, Edge services, cloud services) or will you respect the partner boundary and give us the decision making power of making you a platform component instead of a total solution reseller?

These two men are stepping into big shoes and they have big questions to answer, particularly now when Microsoft finds itself far on the tail end of cloud services and online advertising, crumbling monopoly power over the desktop, customer dissatisfaction with Vista, customer confidence of 2003 – 2007 releases of servers and no upgrade intentions.

Microsoft has to convince both the marketplace, the developers and service partners that it is the future of computing and not Google, Apple, Linux and emerging cloud services. Day by day Microsoft loses its status as the best or perceived best solution starting with the desktop but going into mobility, communications, entertainment, services all while flooding the market with me-too products that fail to challenge the dominant solutions in terms of openness, quality, reliability and price (see: XPS, SilverLight, Microsoft Online)

Your move Microsoft. Give us your best sales pitch.

It seems like we can’t let a week go by without someone being interested in my pocket. What is even more surprising is that they all want it to be open. First the Android from Google promises the world to developers with operating system that takes Java software to the mobile world, then the iPhone from Apple makes a big splash with the ability to write applications once on the web and run them on the device without modification, now Nokia buying Symbian and claiming it will be open so it can set the future of the mobile free.

Why is everyone so concerned with the future of mobile, and why must it be so free and open?

Very few people are sincere in their hate for Microsoft, like Marc Benioff from Salesforce.com who explains that the major motivation behind these moves is to dethrone Microsoft from the leadership role they enjoy in business software.

There is a race to out-open, out-free, and out-bling the future of mobile telephony with the usual development restrictions just a few feet away from the shiny banner of false promises. The world of pay-for-play development tools, the world of application redistribution restrictions, the world of carrier objections and inevitable crippling of functionality we are so used to.

Follow the money…

Remember a few weeks back I wrote about how less than 7% of development is dedicated to Vista? Large software deployments are very difficult to manage (read: expensive) and when you make a decision on a platform you stick with it. This is why you still see Windows NT4 and Windows 2000 running some core services and LOBs in larger companies, they approved the purchase, got the LOB that was supported on the platform and the solution will likely not move until the building is imploded and building rebuilt.

Corporate IT managers feel much the same way about mobile computing. It used to be that only remote workers were road sales people, executives and an occasionally misfortunate new hire in the IT department who got stuck doing on-call as a condition of employment. Today, things are quite different – everyone from the restaurant seater to the hotel chain maids is linked, synced and managed through the mobile applications that everyone rightfully expects to only grow in utility and deployment base.

Everyone is concerned with writing applications on a system that will not be changed on a whim, support discontinued in X years, features changed or locked down when they no longer make money.

Thus, everyone is trying to win the developers who have had to put up with broken and often incomplete API, needed large support contracts to be able to interact with the device or software or just could not use their skills or manage their own application deployment.

What we are seeing is an open PR fight over who will be the openest of them all so they can assure the years of device and operating system distribution and licensing fees.

Which, ironically enough, has been the Microsoft business model all along.