March 22, 2006Now, I was in a meeting with MSFT in NYC a month or two ago... and they hinted that Longhorn (the new windows server OS) wasn't going to hit the street until 2007 and Vista was scheduled to go live in 4Q 2006. And when the Microsoftian said 4Q 2006, he didn't seem to confident...
Microsoft to Delay Next Version of Windows
By STEVE LOHR and LAURIE J. FLYNN
Microsoft's long effort to deliver the next version of its Windows operating system suffered another setback yesterday when the company said that the system would not be ready for consumer personal computers for the holiday sales season.
The Microsoft announcement, made after the close of the stock market, came as a surprise. For more than a year, the company had said it would deliver the new operating system, Windows Vista, sometime in the second half of 2006.
Yesterday, Microsoft said Vista would be ready for large business customers, who typically buy the company's software in multiyear licenses, in November. But the consumer rollout will be pushed back to January 2007.
The slippage, analysts said, is likely to have little lasting impact on Microsoft or PC sales. But it points to the trouble the company has had designing and debugging the new operating system, brimming with features, complexity and an estimated 50 million lines of code.
The analysts said the delay would be a disappointment for electronics store chains, like Circuit City and Best Buy, and for PC makers. "This hits retailers and it hits PC makers that were looking toward Vista for a surge in consumer PC sales at the end of the year," said Tim Bajarin, principal analyst at Creative Strategies, a technology consultant.
The Windows delay follows Microsoft's difficulties in meeting its production goals for its Xbox 360 video game console after its release last November. Yesterday, however, Microsoft said it was accelerating output of the devices, potentially helping it capitalize on the postponement of Sony's rival PlayStation 3. Microsoft attributed the further delay in Windows Vista as a matter of a few weeks to ensure quality and security testing.
Over the last year, Microsoft executives have emphasized the importance of reducing the vulnerability of their products to computer viruses and other malicious code. If the security focus means product development takes longer, they have said, so be it.
"We won't compromise on product quality, and we needed just a few more weeks," James Allchin, co-president of Microsoft's Windows division, said in a conference call with analysts and journalists.
In an interview after the conference call, Mr. Allchin said that he made the decision to take a few more weeks yesterday mornning after a meeting with the leaders of the Windows development team. No single feature or problem prompted his move, he said.
"But I wanted to push up the quality even higher," Mr. Allchin said. "And the balance between usability and security is a tricky one."
The security testing process, for example, has included dozens of outside computer security consulting companies — known as blue-hat hackers — who are given access to the Windows Vista code and its documentation and asked to try to find any ways to break in. Mr. Allchin characterized that program alone as the "largest penetration-testing effort ever conducted on a commercial software product."
The shipment delay, he conceded, was "a bit painful, but we're trying to take a leadership role here and do the right thing."
The new version of Windows has encountered repeated delays. The last major release of Microsoft's operating system, Windows XP, was in 2001. The gap of more than five years is a long one for Microsoft, which has generally shipped a new version of Windows every three or four years.
Add to this the fact that most PCs will require added graphics cards just to run all the gee-wiz wonder stuff that Vista invludes and you've got to wonder why anyone would upgrade - other than the fact that XP will eventually be unsupported like past MSFT Operating Systems.
Of course, the other great thing about Vista is that it will take about 30 minutes to boot up and will likely still have holes in it from a security standpoint. Given these facts, the revelation that MSFT is still trying to figure out how the interweb thingy affects their business, and their woefully inadequate attempts to get the Joe-Mentum back, I'd say that MSFT is in trouble. Sure, they've got a buttload of cash on hand. But at some point, their business model which did so well in the 80s and 90s will need to be changed to address the demands 21st century customers.
(Oh, and it looks like Internet Explorer might finally be separated from the OS (Podcast)? Could this be the opening that Mozilla Firefox needs?)
Finally, if you're looking for the stock play here, don't short or sell MSFT - that's probably already factored in. Look at the retailers and notebook makers and get the pin action. (Who's going to buy a laptop with the expectation that they'll have to buy an upgrade license in a month or two, only to find out that their new pc doesn't handle the new o/s?)
And not to toot my own horn, but this was one of my predictions for 2006... at least, it was one that I offered up in the comments section. ;-)
ARC: St Wendeler