Decoding the new economy

Windows 8 to launch on October 26

The next version of Windows gets a release date.

It’s official, Windows 8 has an October 6, 2012 release date.

For Microsoft, the pressure is now on. Not only does the desktop version have to be shipped but also the smartphone and tablet versions. Their cloud services are going to have to be flawless on the day Windows 8 goes live.

The tablet version is doubly important as Microsoft has to convince cynics like me that the Microsoft Surface is not vapourware. With the Surface RT scheduled for release with Windows 8, Microsoft are going to have to announcing pricing and final specifications very soon. Reports are that the Surface is beginning to appear on Amazon sites so release may not be far away.

Nokia too will now be under a lot of pressure as releasing credible Windows 8 are the only hope for the company’s future. As it is, the current range of Lumia phones are now dead in the water despite massive discounts.

As we’ve previously discussed, Windows 8 is essential to Microsoft’s market position and will define their future – a failure will almost certainly lock the once dominant software giant to a another lost decade.

We’ll see a lot advertising and PR hype around Windows over the next few months, the real test will come at the end of October and with the Christmas buying season.

By the middle of next year we’ll have a good idea of just how successful Windows 8 will be. Steve Ballmer’s future depends upon it.

How much did Vista really cost Microsoft?

Microsoft Vista’s failure hurts Microsoft today.

Microsoft Vista was the company’s despised stepchild – released way past schedule, clunky, slow and disdained so much by the market that PC manufacturers started offering “downgrades” to Windows XP to attract customers.

Despite the embarrassment, Microsoft retained its position as the world’s leading software company and does so today. But Vista certainly did hurt Microsoft and today’s marketplace shows the deep, long term effects of that damage.

Research website Asymco earlier this week looked at the ratio of Windows PCs sold to the sales of Apple Macs over the last 30 years. The ratio peaked at 56 to 1 in 2004.

Today that ratio is 18 and when phone and tablet sales are added in, the ratio is approaching 1:1. Apple has caught up.

It’s no accident 2004 is the peak of the Windows-Apple ratio. In 2004 Windows XP had matured after three years on the market, the older computers running Windows 98 or ME (another hated operating system) were being retired and a new version of Windows – codenamed Longhorn – taking advantage of newer technologies and with improved security was due to be released.

On August 27, 2004 things started to change with Microsoft’s announcement Longhorn would be delayed two years. This effectively broke the product roadmap that underpinned the business models of Microsoft and their partners.

To make matters worse, Apple were back in the game with their OSX operating system well established and a steady stream of well designed new products coming onto the market.

For consumers and businesses one of the advantages Windows systems had over Apple was the cost difference. The “Apple Tax” started to be eroded by the company’s move to Intel CPUs which delivered economies of scale coupled an aggressive program of tying up the supply chain with key manufacturers.

Then Longhorn – now known as Microsoft Vista – was released.

Despite the cheerleading of the Microsoft friendly parts of the technology media, consumers weren’t fooled. The product was slow and buggy with a new interface that confused users. Making matters worse was Microsoft’s ongoing obsession with multiple versions offering different features, something mocked by Steve Jobs, which further confused the marketplace.

Vista languished, customers decided to stick with Windows XP or to look at the faster and better designed Apple computers, and Microsoft’s market share started to slowly erode.

By the time Windows 7 was released Apple had clawed back their market position, launched the iPhone and caught the shift from personal computers to smartphones.

Probably the biggest embarrassment of all to Microsoft was the launch of the iPad, the market had been gagging for good tablet computer since the late 1990s and Microsoft’s partners had failed to deliver, partly because Windows XP, Vista and 7 didn’t perform as well as Apple’s iOS on the tablet form factor.

Microsoft’s completely blowing a decade’s lead in the tablet market is almost certainly due to the misguided priorities and feature creep that dogged Vista’s development. This is now costing the company dearly.

Asymco’s conclusion of Microsoft’s new market position is stunning and accurate.

The consequences are dire for Microsoft. The wiping out of any platform advantage around Windows will render it vulnerable to direct competition. This is not something it had to worry about before. Windows will have to compete not only for users, but for developer talent, investment by enterprises and the implicit goodwill it has had for more than a decade.

It will, most importantly, have a psychological effect. Realizing that Windows is not a hegemony will unleash market forces that nobody can predict.

Vista’s cost to Microsoft was great, it meant the company missed the smartphone surge, the rise of tablets and – possibly most dangerous of all to Microsoft – the move to cloud computing.

A lot hangs on Microsoft’s next operating system, Windows 8. Another Vista could kill the company.

Ranking managers

Microsoft’s problems are deeper than just a misused HR tool

Vanity Fair’s analysis of Microsoft’s lost decade focuses on an unlikely culprit – the management tool of stack ranking.

Stack ranking, or “forced distribution”, is the practice of listing staff members in order of effectiveness or placing them on a bell curve where those in the middle are satisfactory and those at the right hand of the graph are exceptional.

Those on the left of the curve or the bottom of the list are deemed to be underperformers and risk losing their bonuses or even their jobs should the company be shedding staff.

Like all business tools, stack ranking can be useful. One manager of a North American multinational who encountered this when working with an Indian outsourcer described how it was used.

“A senior manager told me how he applied it in his group. Of 300 people, everybody was given a ranking and were told that ranking and given a chance to put their case if they thought it was unfair.

Then the bottom 5% were culled. Tough but fair.”

So at the Indian outsourcer it was applied to large groups and the bottom tier were given the opportunity to put their case. There was some transparency and at least some fairness in the process.

Used poorly though, it can backfire, “using it for groups of ten is stupid and lazy” said that manager who later saw it introduced at his own corporation with catastrophic results.

The real problem at companies misusing tools like stank ranking is too much management.

Like the old saw of “too many cooks spoil the broth”, too many managers create mischief. To justify and protect their positions they build little empires and make work for themselves.

Give empire building middle managers a tool like “stack ranking ” and you have a problem where office politics and patronage become more important than technical skill or performance which is exactly what the Vanity Fair article describes at Microsoft.

Ranking employees in a mindless way is symptom of a bigger problem in an organisation. In Microsoft’s case, the problem is too many managers.

The solution to that problem is simple.

Is Microsoft’s Surface Tablet Vaporware?

Will we see the Microsoft Surface released this year?

In the early 1990s the term “vapourware” appeared, it was born out of big software vendors announcing mythical products with a whole new bunch of features which the opposition already had.

Usually that next great product never appeared; it was just a ploy to stop customers defecting to the competition’s superior product.

There were a number of ways to spot vapourware – the lack of a working prototype, vague release dates and no firm pricing being just three.

Earlier this week, Microsoft brought tears to the eyes of grizzled IT industry veterans who missed the days of regular vapourware announcements with the “launch” of their Surface tablet computer.

After springing the event at short notice on the tech media, forcing the poor petals to travel to Los Angeles rather than their usual haunts of Silicon Valley, Manhattan or Texas and then starting the event late, Microsoft added insult to injury by not even letting the journalists play with a working version of the Surface, let alone take one home to play with.

One of the impressive things about vapourware are the specifications and this is true with the Microsoft Surface. The specifications of the base model Windows RT are about the same as the base model iPad with the added benefit of a keyboard, USB and Micro SD ports.

Looking past the hype, it’s clear Microsoft are having trouble with their strategy of a unified operating system across smartphones, tablets and traditional PCs, which has forced them to announce two different versions of the Surface, running different operating systems on different chipsets.

Having potentially incompatible products makes it even more important for tech journos and early adopters to play with the new devices to see how well they work – that version one of any new product doesn’t work well is another lesson from the 1990s IT industry.

In the spirit of vapourware, Microsoft hasn’t mentioned what either version of the Surface will cost, which probably indicates they don’t know what the final sticker price will be either.

Despite being funny, there was a serious side to vapourware – in the 1990s businesses often held off purchasing decisions or upgrades as they waited for promised products or features to arrive.

While eager customers waited for products that never arrived, their productivity slipped and technologies that should have been adopted earlier ended up coming late to the office desktop.

For Microsoft investors, the nature of the Surface announcement should be disturbing as the vapourware business tactic only works for incumbents in a strong market position and the software giant is anything but strong in the tablet computer market.

While it would be good to see a credible competitor to the iPad, it’s going to be difficult to take Microsoft seriously until we see some working versions that we can play with.

The lessons from the 1990s computer industry are clear – don’t fall for vapourware and buy what works for your business today.

Taxing the Internet laggards

Should users of old software pay more?

Online retailer Ruslan Kogan is never short of a good stunt to promote his business. His latest, a tax on users of Internet Explorer 7 has given him worldwide attention.

Ruslan touches on a real problem for web designers, e-commerce shopkeepers and the online community in general – that Microsoft’s older versions of their Internet Explorer web browsers don’t conform with standards.

This means IE6 and 7 don’t display pages the way other browsers do meaning designers have to spend extra time catering for the people who won’t move to new versions.

For those who insist on using the older versions of Internet Explorer, they are also taking a risk as these products are far less secure than the newer editions.

It’s in everybody’s interests to have the latest browsers and security patches, so both Windows and Mac users should be making sure they have the latest updates on their computers.

Even with the latest updates, it’s worthwhile using a different web browser to the one that comes with the system. That’s why Opera, Mozilla Firefox or Google Chrome are the better options for web browsers.

Ruslan Kogan’s right in forcing users to move onto modern software, it’s a media stunt that might do some good.

FUD on the Desktop

Can moving off Windows XP really save companies money?

“User productivity costs jump up a staggering 40 percent“, “return on investment over 130 percent over a three-year period” and an eighty four percent drop in IT support costs are some the latest claims from Microsoft in their campaign to wean users off Windows XP.

These, undoubtedly true, claims are pretty impressive and compelling for cash strapped IT managers, but do they really matter anymore?

With the rise of Bring Your Device policies and cloud computing, what operating system employees use is rapidly becoming irrelevant.

In large organisations that supply workers’ computers, most systems are run on SOEs – Standard Operating Environments – which means users have limited accounts and can’t install rogue software.

For those organisations wedded to supplying staff with desktop or laptop computers XP is fine and almost all of them are well advanced in their plans to redeploy to Windows 7 or 8 when the XP support period runs out in April 2014.

We’re seeing fewer organisations locked into the SOE model as the financial sums and business benefits of moving over to an employee Bring Your Own Device – BYOD – model start to look compelling.

Developing an SOE is a complex, time consuming task for an organisation – the package has to be tested to work on the company’s hardware which might include dozens of different types of printers, laptops and other devices. Then it has to be tested on all the software employees use.

In a big organisation developing new operating environments is not done lightly. It’s a complex, expensive process.

With a BYOD policy the company can develop a standard desktop environment that runs on a web browser. Staff can then bring their own device running on Mac OSX, Android, Linux or even Windows XP and, as long as their browser is up to date, they can run on the corporate network.

The IT department no longer has to care about what the staff member has on their desk and can focus on more important business technology issues – although sadly the password issue doesn’t go away.

For Microsoft, this evolution in corporate IT is a problem. Increasingly big organisations aren’t placing orders for big fleets of centrally managed desktops. The IT industry has moved to the cloud.

In a perverse way Microsoft are winning the desktop battle, most of those workers in companies implementing BYOD policies will choose Windows 7 or 8 systems because they are cheap and work well in a business environment. The problem is that’s where the profit no longer lies.

While we’ll see more FUD – Fear, Uncertainty and Doubt – about cloud computing, BYOD and Windows XP over the next year, the battle has been fought and won.

Increasingly Microsoft are looking like an exhausted army that has won an irrelevant battle while the real war has moved elsewhere.

The challenge for Microsoft is to find its way back to relevance in an era where the operating system doesn’t really matter.

Tag: microsoft

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