Windows Upgrade Coming Slowly
When Bill Gates can’t show unmitigated glee over a Microsoft Corp. product, the world’s largest software company has a problem.
Last week, after watching a demonstration of the most important version of Windows in a decade, not even the preternaturally enthusiastic Gates could hide his frustration with a project that’s years behind schedule.
“It would be super,” he said dryly, “to get that out in the hands of our customers.”
Gates is the most important of thousands of technologists growing restless with the recent pace of innovation at the company he co-founded in 1975. Few endeavors highlight that feeling better than the company’s latest iteration of its flagship Windows operating system, code-named Longhorn.
Microsoft built its sizable fortune and overwhelming market share by selling new versions of its computer operating systems -- first DOS, then Windows -- every couple of years. Computer users flocked to each new upgrade as they sought relief from the hang-ups, glitches and bugs that historically plagued the complicated software.
This time around, though, Microsoft finds itself the victim of its own success. Windows XP, released in 2001, resolved many of the biggest gripes about the operating system. Subsequent updates fixed even more, to the point that there’s no groundswell for a new version of Windows.
As the company released a preview edition of Longhorn at a Seattle conference, many of the Microsoft loyalists in attendance found themselves shrugging their shoulders.
“It’s got things in it that solve problems,” said Adrian Ford, chief technology officer of Global Graphics Software Ltd., who was invited to show off Longhorn’s printing system. “I don’t think it’s going to be a blockbuster.”
Of course, with Longhorn’s public release still more than a year away, Microsoft has not yet begun to fight. Specific features have yet to be finalized. And there has been no marketing, said Group Vice President Jim Allchin, who oversees Windows.
But the lack of enthusiasm inside and outside Microsoft over Longhorn is feeding a cycle that is lowering morale and encouraging departures to faster-growing tech companies, thereby slowing improvements to the firm’s key products even more.
That’s not a surprising problem for a mature company. Instead of just making great stuff, big companies have to worry about internal leadership and execution, said Lenn Pryor, who until last month was among a handful of Microsoft’s full-time Windows proselytizers.
“Few can do it all well on this scale,” Pryor said. “Those who do are a special few with unique leaders and a unique culture. Microsoft has work to do still to achieve both.”
More immediately, the company has to be concerned with customer complacency with Windows and Microsoft’s other dominant software, the Office productivity suite. Those two programs generated 84% of the company’s profit in the most recent quarter, and thousands of other tech firms depend on their continual improvement to sell computers and software that works with the programs.
“Microsoft’s problem right now is that ‘good enough’ feeling,” Directions on Microsoft analyst Matt Rosoff said. “I know a lot of people with older versions who say they don’t need to upgrade.” With Office, Rosoff said, that’s even more of an issue: Many people are comfortable with Office 2000 and Office 97.
Longhorn was aimed at interrupting that slide.
In 2003, Gates said the principal technical accomplishment would be an end to the traditional way of storing data in a complex hierarchy of folders, some of which get lost in the clutter. Instead, files would go into a database accessible in any number of ways.
The financial strategy, meanwhile, was to save a wide range of other innovations for Longhorn and then tie the next version of Office to it. Consumers would have to upgrade if they wanted many new applications.
Both of those plans have fallen apart.
The technology stumbling block was that the file system required a set of programming tools that still hasn’t been finished, Allchin said in an interview.
Financially, the bundling plan disintegrated as time stretched out from the 2001 release of Windows XP and as computer makers and smaller software vendors pushed for something new to build on.
“Our partners are asking for all these other features they want to bring to market,” said Allchin, who made the decision to change course last year. “There’s no question that was a significant driving factor.”
Several former Longhorn exclusives, including tools to build graphics and communication applications, will now be compatible with Windows XP and other old operating systems. The next version of Office will run better on Longhorn but also will be suitable for previous systems, Allchin said.
What Microsoft showed of Longhorn’s remaining features last week included security improvements and a fast method of searching everything on a computer -- including document files, e-mails and calendars -- by using keywords or the name of the original author.
The search tool was one of the best-received disclosures at the Microsoft conference, which was designed for hardware engineers. But even that bears a strong resemblance to recent third-party desktop search tools and the Spotlight feature in the Macintosh OS X Tiger operating system released on Friday by Apple Computer Inc.
Because Longhorn’s leap forward now appears more of a hop, Gartner Inc. predicts that the system will run just 36% of PCs by 2008, compared with 56% still using Windows XP.
Allchin said Microsoft “will put a tremendous amount of money behind it,” with advertising targeting both the consumers who bought XP and the professionals running Windows 2000.
Other executives implicitly acknowledged that there would be no mad rush to upgrade and pointed to new sales strategies -- convincing people to put additional PCs in their living rooms and urging them to buy laptops and other more expensive hardware, which for the first time will bear Microsoft “premium” labels.
Only 2 million Microsoft-powered Media Center PCs, which focus on living-room entertainment, have been sold in 2 1/2 years. Overseas markets for personal computers are increasing much faster than in the U.S., but there, machines with the free operating system Linux are enough of a threat that Microsoft is beginning to offer stripped-down and cheaper versions of Windows.
Microsoft faces additional threats in search, browser and media technology from Google Inc. and others. Just because none poses a lethal threat to Microsoft now doesn’t mean they never will, said Microsoft engineers and conference attendees like Justin Oliver, an interface developer at Centurion Technologies Inc.
“Google is never ceasing to amaze me,” Oliver said.
Microsoft has tried to compensate for the Windows slowdown by investing in those newly competitive fronts and in Xbox video game consoles and cellphone software. But its profit has increased little in the last several years, and the stock, which closed Friday at $25.30 on Nasdaq, is down 58% from its high of $59.97 on Dec. 31, 1999.
Decreasing financial rewards and intellectual challenges already have stirred griping among employees, some of whom have started complaining about the bureaucracy on anonymous blogs.
Allchin said Microsoft was trying to cut down on meetings and committees and make its decision-making clearer. He also said much of the venting was understandably due to longer gaps between versions of the firm’s products.
“There are some parts of the company where we need to ship more often,” Allchin said. “There are always ways we can improve.”
The delays, some of which stem from greater product integration, have been cited in recent months by some of the firm’s more visibly departed personnel, including Mark Lucovsky, a key Windows architect and officially designated “distinguished engineer.”
It usually takes two to three years after a Microsoft programmer fixes a problem before it reaches the employees of big customers, Lucovsky blogged from his new perch at Google. Amazon.com Inc. and other companies that essentially live on the Web can push out enhancements in a day, he wrote in February: “Microsoft used to know how to ship software, but the world has changed.”
In April, the profusion of blogging within Microsoft amplified the resignation of Pryor, when he decamped for Internet telephony start-up Skype Technologies, which recently boasted of its 100 millionth download.
“I just couldn’t go on being an evangelist for a gospel that I don’t believe I can sing,” Pryor wrote on his own blog.
A subsequent posting last week by Microsoft’s most-read Web scribe tried to be more supportive of the company.
“Sometimes computers seem as exciting as cable TV, electricity, or water,” Robert Scoble wrote. “That alone is exciting. If we can make technology that reliable where it just becomes invisible (er boring) then I think we’re all better off.”
