All Things Digital

You wouldn’t know it from the protests over Microsoft’s decision to retire Windows XP at the end of June or the PC users exercising their Windows Vista downgrade rights, but Vista is actually selling quite well. Microsoft (MSFT) Chairman Bill Gates said today that sales of Windows Vista have reached 140 million copies worldwide. “That’s a very rapid sales rate,” Gates explained.

Sure is. Especially for an operating system that’s met with such a middling reception. That said, you’ve got to wonder if the 140 million copies to which Gates refers are deployed copies or licenses sold. Because if it’s the latter, the number would be decidedly less impressive. It wouldn’t really account for volume licenses sold to corporate customers, copies pre-installed on OEM computers, and copies downgraded to Windows XP. And Gates has made exactly this type of oblique statement before, the last time Microsoft announced Vista sales figures.

XP will hit an end-of-life. We have announced one. If customer feedback varies, we can always wake up smarter, but right now we have a plan for end-of-life for new XP shipments.”

–Microsoft CEO Steve Ballmer, April 24, 2008

Well if this doesn’t count as the sort of feedback that would cause Microsoft (MSFT) CEO Steve Ballmer to wake up smarter, I’m not sure what does. Heeding the cries of their Vista-averse customers, Hewlett-Packard (HPQ), Lenovo (0992.HK) and Dell (DELL) are now offering customers who purchase machines running the Business and Ultimate flavors of Microsoft’s new state-of-the-art OS the chance to replace it with Windows XP Professional. And they’re doing it in a way that will keep Windows XP around well beyond the June 10 deadline Microsoft has set as the end of its retail sales.

How? Well, remember that “downgrade” to XP option Microsoft quietly offered PC makers last summer? The one that Mike Nash, corporate vice president of Windows Product Management, said was designed for “customers who need a little more time to make the switch to Windows Vista”? Well, HP, Lenovo and Dell are exploiting it to their full advantage. HP and Lenovo are shipping XP Pro recovery disks with qualifying Vista machines. Dell has gone one step further and volunteered to exercise those downgrade-to-XP rights on their customers’ behalf, installing Vista on their new machines and then purging it and replacing it with XP.

All of which, seems a bit ludicrous, really. Why bother with such a charade? Perhaps because every downgrade to XP counts as another copy of Vista sold.

As a company, and as individuals, Microsoft (MSFT) really does value honesty and openness. Consider this: In a presentation yesterday at RSA 2008 in San Francisco, David Cross, a product unit manager at Microsoft, explained the design concept behind the User Account Control in Windows Vista in the following very honest, very open way:

The reason we put UAC into the platform was to annoy users. I’m serious.”

A true credit to the company, that Cross.

If that truly is the reason for UAC’s inclusion in Vista, it’s served its purpose well.

“Windows is too monolithic.” So says Gartner (IT) analyst Michael Silver who, with colleague Neil MacDonald, told attendees of a Gartner-sponsored conference in Las Vegas that Microsoft’s (MSFT) ubiquitous operating system is “collapsing” under the weight of 20 years of legacy code.

Silver and MacDonald argued that the operating system’s evolution is hamstrung by a vast and unwieldy code base that hampers meaningful change. “This is a large part of the reason Windows Vista delivered primarily incremental improvements,” they said. “Most users do not understand the benefits of Windows Vista or do not see Vista as being better enough than Windows XP to make incurring the cost and pain of migration worthwhile.”

Ob-vious-ly. And?

“Windows as we know it must be replaced,” said the two.

OK. But replaced with what?

It should be replaced with a smaller OS, the two analysts said. A thinner, more robust, more modular OS. One that makes application development, support and, above all, the user experience easier, more pleasant. An elegant OS that encourages users to upgrade, rather than desperately cling to older versions.

You mean an OS like … like Mac OS X (AAPL)? Isn’t Microsoft already working on something like that?

If you hang on to Windows XP long enough, you may be able to upgrade directly to Windows 7, avoiding Vista entirely–just as many Windows users avoided the lamentable Windows ME.

On Thursday, Microsoft (MSFT) extended XP’s oft-extended stay-of-execution, saying it will continue to sell Windows XP Home for ultra low-cost PCs (ULCPCs) — budget machines like the Asus Eee PC that would likely spontaneously combust during a Vista install. XP Home will be available for OEM installation on ULCPCs until June 30, 2010, or one year after general availability of the next Windows version, whichever is later. But its availability for all other machines will end on June 30, 2008.

Such a limited extension of XP’s availability will no doubt irk those users who would love to continue using the OS indefinitely. That said, it’s a savvy move for Microsoft which, had it pulled XP from the shelves entirely, might have ceded the ULPC market to Linux. “This is yet another proof point that Windows Vista is just too big to cover everything that everyone wants to do with it,” said Gartner analyst Michael Silver. “You need something smaller, more modular.”

Yeesh. Microsoft (MSFT) has extended the availability of Windows XP nearly as many times as it extended the ship dates of Windows Vista and Office 2007. The company had planned to cut off XP sales through the retail and original equipment manufacturer channels on Jan. 30, 2008, one year after the Vista’s debut. But the poor reception given the new OS and “feedback” from XP advocates, gave it pause to reconsider. So Microsoft adjusted the deadline to June 30, 2008. Now it’s planning to to adjust it again. Sources close to the company tell Infoworld that Microsoft plans to extend the availability of Windows XP for low-cost laptops beyond June 30. No word on how long. Perhaps until more folks upgrade to Vista …

According to the results of the 2007 CoreBrand Power 100 study (PDF), Microsoft (MSFT) has suffered significant erosion of its brand power since 2004. The software giant fell to No. 59 in Corebrand’s ranking of global brands for 2007, down from No. 11 in 2004.

Why? The market research firm speculates that the decline could have something to do with Apple’s (AAPL) “Hi, I’m a Mac” ads.

“The effect of Apple’s ‘Hi, I’m a Mac’ advertising campaign may have taken its toll on Microsoft,” CoreBrand CEO James Gregory said in a statement. “The launch of a series of new products, following a long, relatively dormant period, will be closely watched to see if it will have a positive impact on the Microsoft brand.”

Yeah, Vista probably had nothing to do with it …

I am not sure how the company lost sight of what matters to our customers (both business and home) the most, but in my view we lost our way. I think our teams lost sight of what bug-free means, what resilience means, what full scenarios mean, what security means, what performance means, how important current applications are, and really understanding what the most important problems [our] customers face are. I see lots of random features and some great vision, but that doesn’t translate into great products.

“I would buy a Mac today if I was not working at Microsoft.”

–Longtime Windows development chief Jim Allchin, Jan. 7, 2004

Allchin wrote that message four years ago, and when it was made public as part of one of Microsoft’s (MSFT) ongoing lawsuits, he claimed he’d written it to be purposefully dramatic. And perhaps that was the case.

Still, it’s hard not to look at the middling, unenthusiastic reviews given the company’s long-delayed Windows Vista OS and think that maybe he was just being honest. Hard, too, not to look at the company’s unexpected (some feel unprecedented) decision to slash the retail price of Vista to spur sales–and conclude that maybe a lot of consumers feel the same way.

Yesterday, Microsoft announced plans to lower OS’s retail price in advance of if its first major update, Service Pack 1 (SP1). The price cuts vary by market, but in general will range from 20% to 40%. In the states, for example, the price of Vista Ultimate will drop to $219 from $299, Vista Home Premium to $129, from $159–substantial cuts, and ones Microsoft hopes will broaden Vista’s appeal.

“Windows Vista has been on the market for more than a year now, with more than 100 million licenses sold in its first year,” Windows consumer marketing Vice President Brad Brooks explained. “While this is great progress … we’ve observed market behavior that suggests an opportunity to expand Windows stand-alone sales to other segments of the consumer market. Over the past year, we conducted promotions in several different markets combining various marketing tactics with lower price points on different stand-alone versions of Windows Vista. While the promotions varied region to region, one constant emerged–an increase in demand among consumers that went beyond tech enthusiasts and build-it-yourself types.”

Analysts, while taken aback by the price cut, seemed to think it a savvy one. “I think this is a smart strategic move,” said NPD Group Inc.’s Chris Swenson. “Vista hasn’t hit their initial expectations.” That said, Swenson doubts the price cut will have Vista flying off the shelves. Microsoft “really wants to help spark Vista sales, though I don’t see it taking off like a rocket like the way Office did after its price was cut.”

QUOTED

No one really believed we would ever ship so they didn’t start the work until very late in 2006.”

–Windows Chief Steven Sinofsky reveals that no one at Microsoft thought Vista would ship on time either

Every time I start the computer it says: Configurating updates: stage 3 of 3 - 0% complete. And then reboots, and reboots, and reboots. … I had it rebooting for over an hour before I stopped the madness.”

–A Vista user encounters Windows Vista Endless Reboot Pack 1

Microsoft has “isolated” another problem with Windows Vista Service Pack 1. Responding to complaints of endlessly rebooting PCs, the software giant has temporarily suspended the automatic distribution of a Windows Vista Service Pack 1 prerequisite.

“Immediately after receiving reports of this error, we made the decision to temporarily suspend automatic distribution of the update to avoid further customer impact while we investigate possible causes,” Nick White, a Vista program manager, wrote in a post to the company’s blog. “So far, we’ve been able to determine that this problem only affects a small number of customers in unique circumstances. We are working to identify possible solutions and will make the update available again shortly after we address the issue.”