Despite forays into Web software with Windows Live and Office Live—collections of e-mail, instant messaging, and Web publishing apps—Microsoft's core franchises remain wedded to the PC. Big gaps between new versions don't sit well with business customers that pay annual fees for the right to upgrade. Balancing speed with quality will be key.
Now could be the time for a new approach. Two of the principal architects of Windows Vista, co-president Jim Allchin and chairman Bill Gates, have assumed diminished roles, while a third, former VP Brian Valentine, has left the company. The future of Windows is in the hands of chief software architect Ray Ozzie and senior VP Steven Sinofsky, whom Microsoft put in charge of Windows development last spring. Web-centric technologies like Windows Presentation Foundation Everywhere and a new Windows Live layer of APIs show where the company's headed.
But don't count desktop Windows out. "We'll continue to do exciting new releases," Ballmer said. On the docket for the next version of Windows: support for higher-bandwidth networks, improved graphics and video playback, a long-awaited update to the Windows file system, and apps that take better advantage of the power of multicore processors.
By several accounts, demand for Vista, Office 2007, and Exchange Server 2007 looks promising. In an October survey of 672 business technology pros by InformationWeek Research, 39% said their companies would install Vista within a year of its release. Verizon Communications and Viacom's MTV Networks plan to install Vista on thousands of new PCs in short order, and Microsoft expects 200 million PC users to have one of its three new products installed by the end of 2007. Microsoft is touting the products' ability to let workers communicate and find information more efficiently, while helping IT departments keep PCs more secure, deal with government regulations, and lower IT support costs.
Microsoft plans to deliver 30 additional business products in the next year that add even more capabilities to Windows, Office, and Exchange. Those include add-ons to Office for data mining and real-time communications, and Internet phone calling and videoconferencing within Vista.
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