The Computer Buzz

May 1st, 2008

Nome and Paul Van Middlesworth - owners - The Computer Factory
 

Microsoft's Vista Disaster

If you didn't buy a PC in the past 16 months you may be only dimly aware of the controversy swirling about Microsoft's latest operating system, Vista. For us in the business, it is an evolving soap opera and we have the best seats in the house.

The high tech and business press (with the exception of a few Microsoft derriere smoochers located mostly within 50 miles of Redmond Washington,) have panned Vista non-stop since its arrival in Feb 2007.

The Christian Science Monitor calls MS Vista the PC industries "NEW COKE" alluding to the 1985 fiasco when Coca Cola replaced its hundred-year-old flagship product with new and improved "New Coke." Consumers rebelled and Coke was forced to kill New Coke and bring back Coke Classic."

Others call Vista "Microsoft Edsel II." "Microsoft Edsel I" was Windows ME. Microsoft hoped ME would displace Windows 98 in 2000 but users forced Microsoft to dump ME and bring back Win 98 in less than a year.

Vista has become the operating system for people "who don't know any better." For most users Vista offers no tangible benefits over XP. For home users Vista is slower and more complicated than XP. For business, it is slower and incompatible with many industry specific applications.

Despite consumer's lack of enthusiasm for Vista and a virtual boycott by business, Microsoft keeps pretending all is well. In order to make it appear that Vista is gaining acceptance in the business sector where the predominant operating system is XP Pro, Microsoft has come up with an amazing ploy. They sell the Vista Business OS at a slightly lower price than the favored XP Pro but give a free copy of XP Pro with each copy of Vista Business. Users save money by purchasing Vista Business, installing the free XP Pro and then throwing the Vista in the trash. Of course Microsoft counts these as Vista sales.

Microsoft and the major computer sellers conspired from the outset to limit consumer access to XP by retailing only Vista PCs. By April of 2008 Vista's penetration in the business community still remained in single digits and 80% of non-business PCs were still non-Vista. It had become obvious that Vista was not going to make it. Rather than accept the decision of the marketplace, Microsoft opted the Tanya Harding maneuver and kneecapped XP.

After threatening for a year, Microsoft finally announced that XP would be removed from retail distribution at the end of June. Major PC sellers would not be permitted to sell PCs with XP Home or Pro. Only custom PC builders like The Computer Factory would be allowed to build systems with XP through the rest of 2008.

The scorched earth Vista strategy has cost Microsoft and the PC industry dearly as business and home users deferred PC purchases or upgraded their old PCs. (And why not? A three-year-old XP PC will run circles around a brand new Vista box.) Disillusioned PC users turned to Apple in increasing numbers and the Vista debacle spurred interest in non-Microsoft operating systems and open source office suites among both business and consumers. Microsoft's last quarter client services revenues, derived mainly from operating system sales, suffered a 24% drop compared to last years corresponding quarter.

Consumer pressure may be starting to force Microsoft to reconsider its XP end game. Dell announced last week that they would continue to produce XP PCs past Microsoft's June deadline. Steve Baumer, Microsoft president in a speech at a university in Belgium last week acknowledged that Microsoft might be willing extend the life of XP if consumers really want it.

Why Microsoft has refused to acknowledge Vista's failure is open to speculation. Our theory is that when a company's top management allows the spending of billions of dollars and several years in the development of a product that doesn't work there is a predictable pattern. First comes denial, then blame assessment, and finally head rolling. Microsoft is at stage one.

There is a certain ironic similarity between Vista and Microsoft itself. Both are bloated, ineffective, bureaucratic, unimaginative and largely dysfunctional. It has been said of Microsoft in recent years that any of their products that actually work well were either bought or stolen. Obviously they didn't buy or steal Vista.