Microsoft Partners Stunned By Vista, Office Delays

Vista’s slip into 2007 hurts—and hurts bad, partners said. And subsequent news that the new Office also slipped added insult to injury.

Microsoft’s delays are “a big blow to us,” said Todd Swank, director of marketing at Northern Computer Technologies, a system builder in Burnsville, Minn. “That will put a damper on holiday sales,” he said, noting that Nor-Tech’s VAR customers sell to both businesses and consumers.

“The desktop refresh cycle just took a huge hit,” said Glen Coffield, president of Cheap Guys Computers, a system builder in Orlando Fla. “Microsoft is saying seven or eight months before launch [that] they can’t get it done. It’s obviously not a small problem,” he said.

Given the lead time hardware OEMs and system builders need to load, test and customize their installs, Microsoft said last week that only large customers with volume license deals will get the coveted code in November. Broad consumer availability will wait until January.

Jim Allchin, co-president of Microsoft’s Platform and Services, said the company acted responsibly and in response to partner and customer feedback, a contention that some partners dismissed out of hand.“Tell me again why it’s in our interest to put off the new business: deploying Vista, doing server upgrades, migrations and consolidations? How is it in our interest to wait when the delay will cause customers to wait for the new release?” asked Ron Herardian, CEO of Global System Services, Mountain View, Calif. “We’re being told that the same delay that will cause a loss to Microsoft is beneficial to us. Not unless we’re selling solutions based on something else besides Windows, like Linux or Solaris 10 x86.”

Several solution providers pointed out that this is not the first slip and may not be the last for the new Windows client. “I think it’s actually going to be longer [than January], said one VAR, who requested anonymity. “Vista is a huge project.”

Microsoft last week said the planned 2007 release of the Windows Longhorn Server is still good. The question is whether anyone believes that.

Microsoft’s worst nightmare is that by the time these products ship, they will have become irrelevant, one insider said.

There is a growing perception that Microsoft needs to focus on what’s important. “They don’t seem to know what they want to be,” said Ron Zapar, CEO of Re-Quest, a Chicago-area database specialist. “One day they’re focusing on enterprise software, taking on Oracle; the next they’re talking services against Salesforce.com and Google; the next they want to be in consumer electronics against Nintendo and PlayStation; and yet here they can’t even deliver their core product anywhere near on time.”One system builder, who requested anonymity, said Microsoft’s monopoly status allows it to get away with such behavior. “Everyone is being held hostage. It’s not as if you can go across the street and get something else.”

The system builder said he has evaluated Linspire and Novell Linux desktop alternatives but feels they are not ready yet. “It’s just not the same experience [as Windows],” he said.

Large software players are sharing the pain.

“This has a big impact on us,” said Jeremy Burton, senior vice president security and data management services at Symantec. The Cupertino, Calif.-based security ISV is a leader in client and server security offerings and must test them thoroughly on new operating-system releases, he said.

Smaller ISVs that were focused on new Vista-specific products without a big legacy installed base were less worried. Some ISVs attending last week’s Mix06 Web Devcon said they will be fine shipping their goods on beta code.

Early Vista adopters, such as ISVs building applications based on the Windows Presentation Foundation (WPF) subsystem, said they’re comfortable waiting a few weeks longer or deploying beta versions.“I think any delays on WPF won’t pose problems,” said Andrew Whiddett, chief of technologies at user-interface developer REZN8. “The advantages in using the platform far outweigh those scenarios. I prefer they get it right.”

Some systems integrators likewise downplayed the news, saying they haven’t started planning Vista projects because few large companies are to the bleeding edge of the upgrade cycle.

Microsoft clearly thought the snafu—or perception of a snafu—was serious enough to merit a reorganization. Two days after Allchin announced the Vista delay, Microsoft confirmed reports that Steve Sinofsky, senior vice president in charge of Office, will now head up a Windows and Windows Live group.

Sinofsky, a management stickler known for setting realistic product goals and shipping pretty much on time, was a natural choice, observers said.

Will Poole, who had been senior vice president of the Windows client, will take over a new Market Expansion Group focused on emerging markets and alternative form factors. This reorg was announced on Thursday by Kevin Johnson, co-president with Allchin.Left unanswered in the wake of this commotion is exactly who will take on Sinofsky’s role in the Office group. Microsoft later said Office 2007, a key release, is now due out early next year, slipping from late this year.

In the final analysis, the Vista slip was a surprise only for those who actually believed what Microsoft had been saying.

Asked about the delay, Rick Sherlund, a partner at Goldman Sachs, said, “It’s not the first time. Software is always late, and when you think it’ll be different this time, there’s a 90 percent chance you’re wrong.”

It could be argued that for hardware makers and system builders, getting the OS after the potentially lucrative holiday buying season is a blessing because it is less disruptive to their pre-loading plans. But that’s only true if the option was getting the software in November or December when it would disrupt their pre-holiday installation process.

Some observers said Microsoft could have released code to large hardware OEMs but opted not to because doing so would have overly favored Dell and other players who sell directly on the Internet.“Faced with a choice, they’d rather have a product in January than in November or December … but October would have been better,” Sherlund said.

STEVEN BURKE, STACY COWLEY & KRISTEN KENEDY contributed to this story.