Will Microsoft's BING Finally Bring Success in the Search Engine Market?

Microsoft's new search service is called BING, and takes a contrarian approach to the simple Google Interface. The BING interface is kind of a cross between Google and the Yahoo Directory, with a bit of Expedia, MapQuest, Shopping.com, UTube and Flicker thrown in for good measure. Never accuse Microsoft of being modest in their ambitions--this site takes on directly just about every major category in the online world.

I've given BING a quick look. It's polished and appears pretty comprehensive. The search results don't seem to be that much different from previous Microsoft efforts, although the interface's major categories may allow the finding of information more quickly than an elegantly simple one like Google's--if you know upfront the category of information that you're looking for.

HOW LIKELY IS SUCCESS?

Will they succeed? They have many times before in similar situations. They've been laughed at and written off in quite a number of markets over the years. MS has a bad corporate habit of releasing poor products in their first one, two, and even three incarnations. Any other company would give up after so many failures in a particular segment-but not Microsoft. Don't forget that as a software company, Microsoft has always seemed to believe that it is their god-given right to sell every line of software code written in the world.

There are many examples of Microsoft rising from the dead in software market segments. In spreadsheets, Excel was at one point in time a speck on the wall compared to Lotus 123. WordPerfect had a commanding lead over MS Word in word processing back in the DOS days. And a large number of MS Network Operating System Server software offerings (beginning with LAN Manager) were considered a joke relative to Novell Netware, for the longest time back in the 90s.

In all of these situations, Microsoft had the last laugh, soundly beating their seemingly entrenched and unbeatable rivals in large market segments. As a result of this corporate history, they believe that can beat anyone and rarely give up. Occasionally, I have seen them back off, notably after several tries competing with Intuit in personal financial software. But if it's considered a strategic, core segment by MS, they will throw a huge amount of resources at the segment, take large losses, and not give up until they've broken through.

I call them the Terminator of High Tech.

TERRIBLE TRACK RECORD IN ONLINE SERVICES

Of course, this isn't a pure software market, its online services. The problem for Microsoft with Bing and the search engine market in general is that they've been floundering almost completely, for a long period of time, in online services. In fact, they've not had much success in their history online at all. This is especially noteworthy in contrast to their domination of the desktop software business, and the competitive advantage their desktop monopoly should provide them in online services. Yet they've done poorly in almost everything online, and are a distant third in search engine marketing--not even all that close to a fading Yahoo.

So as most pundits will confirm, Microsoft has been terrible in the online world. This does not bode well for the possible success of Bing. But as I alluded to earlier, there is another side to this equation.

MICROSOFT CONSIDERS ONLINE SERVICES IN GENERAL AND SEARCH ENGINE MARKETING SPECIFICALLY, TO BE ABSOLUTELY AT THE CORE OF THEIR FUTURE SUCCESS--AND EVEN THEIR SURVIVAL.

Yes, this hugely successful company has always been a bit paranoid--which may be a bit on the humorous side given their overall success. But it has worked well for them over the years. It has given the company a sense of urgency which is very hard to generate in corporations of their size and stature. So anyone with a sense of history would be foolish to rule them out.

HOW CAN MS OUTFLANK GOOGLE?

But how are they going to defeat their competitors, mostly notably Google, this time in the online world? In my quick evaluation, I didn't see anything technically revolutionary, such as demonstrably more-relevant search results. Some people may prefer the Bing category-oriented interface better than Google's, but it will be a matter of taste--I can't see an overwhelming advantage here. In past cases MS may have overwhelmed a segment with marketing, or simply given away a product, to ensure defeat of a rival they feared could grow into a broad line Software competitor (Novell, Netscape, etc.). It's unclear to me what strategy they will be able to take to defeat Google, which is a dominant, embedded brand with wild profitability in Search Engine Advertising. But I believe they fear the Google franchise and know they need to crack to code to online success if they are going to retain their position in the long run. So don't expect any throwing in the towel any time soon.

Maybe Microsoft will hit upon some innovative strategy that will enable them to win the day in this crucial market. But the one thing I can think of right now, that may work in their favor, is deep pockets, longevity and sheer persistence. Google has also been unable to achieve success outside of their domination in their core Search Engine Marketing segment. This is very analogous to Microsoft's struggles outside of desktop software. The Search Engine advertising segment will eventually mature, and there are already some early signs of slowing. Plus Google risks killing the goose that laid their golden egg by raising their "Auction" bid rates to levels that will make it hard for their customers to make money--don't get me started on that. Advertisers may eventually take their advertising budgets elsewhere. So for MS in this crucial platform it may be a matter of hanging around, making incremental improvement to their Search Engine offerings, until Google shoots itself in the foot.

Doesn't sound like much of a strategy, I know. But stranger things have happened. Let me know what you thing of Microsoft's launch of Bing. Post a message or drop me an email.

Phil Morettini
PJM Consulting
http://www.pjmconsult.com/

Google Chrome--a Strategic Platform or just another Browser?

Google's new Chrome Browser came out a few weeks ago to quite a bit of attention. It's big news 1) because it's from Google and 2) it brings back memories of the "browser wars", and seems like it could potentially signal the next big battleground in the intense rivalry between Google and Microsoft.

I've downloaded Chrome and played with it a bit, but this isn't intended to be a technical review of Chrome's merits. It seems reasonably snappy, and has Google's typical minimalist design philosophy, including a single box for multiple functions (search, address bar, etc.). Your personal preferences will decide whether you like that or not. It has some nice features such as tabbed browsing, which theoretically should prevent one bad browser window from crashing all open browser windows--much like when Windows became multi-threaded. Nice stuff, but doesn't really fundamentally change the browser game. But technically it's still a beta anyway (of course just about everything is with Google), and it will evolve over time--so it's not really time to judge it from a technical perspective anyway.

What I want to do is to examine Chrome as a strategic move by Google with respect to the software and online worlds--what does it really mean, where will it take the market, and what are its chances for success?

Let's take a look at some of the potential ways that Chrome could affect the marketplace:

A Better Browser
Of course, PR propaganda always will say that this is the "real" reason for bringing out a new product such as this. When I was at HP we used to call this "making a contribution to the market". Google in particular often gets sanctimonious about this type of thing, with all their "do no evil" and saving the world stuff. Does the world really need another, better browser? Not sure. Firefox and Safari, to name two, are already probably technically superior to IE, and while they've made some inroads in the marketplace, they still trail Microsoft by a wide margin. But history tells us that competition is a good thing, and a step forward on major platform like a browser can certainly be thought of as a gateway to allow software innovation to develop faster. Having a company like Google enter the fray should increase rate of innovation that's possible in the online market.

An Application Development Platform
This is the position that many pundits suspect may be the major impact of Google's move. In their introduction, Google talked quite a bit about "remaking" the browser for Web 3.0, if you will. And a fresh approach does make sense, given that Internet Explorer was conceived long before serious online applications were envisioned for the Web. With SaaS and Web 2-3-4.0 currently all the rage, having a browser platform designed from the bottom up to accommodate online software applications should be a good thing. If it's all it's cracked up to be, this could conceivably be a game-changer and a real threat to Microsoft. The key here is how much of the talk about re-architecting the Browser is real, and how much is hype. This will become more apparent over time as Chrome is further developed, and application developers take a look to see if there truly are features they can take advantage of to build better online apps for users.

An Additional Way To Track User Behavior
This is one of the more cynical viewpoints as to the major motivation behind Google's introduction of Chrome. The thinking is that this is one more insidious move by Google to "big brother" your online activity. It's no secret that Google uses web activity data they collect by various means (such as Google Analytics) to fine-tune their advertising business. Certainly owning browser could be seen as the "holy grail" towards creating a complete characterization of online activity. What else might they use this data for, in addition to fine tuning their advertising platform? That's the question and concern.

A Way To Drive More Search Traffic And Adwords Revenue
Along the same lines as the bullet point directly above, owning the browser could be seen as the ultimate in terms of driving web traffic toward Google's Adwords online advertising. The first thing you see upon downloading Chrome is the opportunity to switch to Google as your default search engine. How much will they do in this regard, either subtly or in a straightforward manner? As stated above, at a minimum, it gives them the opportunity to make Google the default search engine, which is critical to their base business. Only time will tell how much of a factor this is in Google's Chrome strategy.


A "Real" Competitor Aimed At Microsoft IE To Make Them Defend Their Turf
Of all the bullet points I'm raising, this is the one I'm most sure of. Google and Microsoft are locked in one of those classic death matches for online software supremacy, and don't miss an opportunity to tweak their arch-rival and make them sweat a bit. Going back to the application development argument above, there is a feeling that Chrome could serve as the basis for a suite of online Google apps to threaten obsolescence for Microsoft's desktop software business. I don't doubt that Google may try to do this. But even if from a technical and marketing perspective Chrome is only a modest success, it almost certainly will get Microsoft's attention and cause them to expend resources and management attention on browser technology, to an extent they may not have preferred.


SUMMARY
Chrome is intriguing, but it's too early to tell for sure what the major reason is for this Google initiative. They may not even know for sure themselves at this point. But the product, and more importantly the move itself, will likely make Microsoft react. The ensuing competition should be all good for the user and developer communities, as long as it doesn't take us toward another tiresome and market-paralyzing "platform API" war. I'll be following the future development of Chrome closely to see where it takes us--how about you?

Phil Morettini
PJM Consulting
http://www.pjmconsult.com/

Competing with Entrenched Software & Technology Industry Giants

I was reading an article in the business section of our local newspaper recently about a new Search Engine name CUIL (pronounced Cool). I already knew about CUIL, because I had noticed that it had recently indexed the PJM Consulting website. One of their claimed differentiating factors is that they've their search index is twice as large as Google's is. In addition, they believe that they have improved the ranking algorithms, and they also present the results in a different way. The results offer fewer results per page, but more comprehensive information on each site, and often include a photo or other graphic. The premise of the article was that it may have a chance to be a real competitor vs. Google, or at least Yahoo and Microsoft, for market share in the huge search business. The founders have impressive pedigrees and come from Google on the technical side.

The article gives credence to the possibility of CUIL being a potentially serious competitor to Google, Yahoo and MS, while pointing out that quite a few companies have attempted to enter this fray, creating barely a blip in search engine market share to date.

I've taken a quick peek at CUIL--the presentation is definitely different and may be superior for some tastes. But at least at this early stage, in my quick look I wasn't terribly impressed with the relevancy of the search results. No matter how you present the data, the relevancy of the results is paramount in search. I'll be sticking with Google for now, but will keep an eye on CUIL to see how it develops over time.

Will CUIL succeed? It's of course way too early to tell. They're taking on what is arguably the most powerful technology company in the world today, attempting to compete with them in their core area of strength. So you can't say that the odds of success are high, which they rarely are for any startup. But this IS the technology business, so you've got to give them at least a puncher's chance. Like it usually is, the key will likely be how well they execute.

But execution aside, what's the best way to go about competing in the software and technology industries today? Should you just steer clear of the elephants of the industry? Many believe this is prudent, but I think it is not always necessary. After all, it wasn't so very long ago that is was nearly impossible to get a venture capitalist to fund a company that was perceived to compete in a category with Microsoft (which could be viewed as MOST categories of the software business). Yet a short time later, Microsoft is considered in many ways a dinosaur, one that is quite beatable (don't get the impression that I'm writing MS off--I'm not. Redmond may yet rise to dominate again).

If it isn't insane to compete with the giants, what are some best strategic practices that an early stage tech company can adopt to give it the best chance to survive and thrive, when entering market categories with large, entrenched competitors?. Let's take a look at a few ideas:

Make Sure that you can Differentiate - This would seem obvious for any business, but when you are going up against a huge company with a good brand--well, don't even try it without significant differentiating factors. They don't need to be product related, necessarily--it could be free and outstanding support, better price points, exceptional ease-of-use, or many other things. But don't kid yourself--you will need REAL differentiation.

Pick a Niche, any Niche--at least to start - It is important to pick a small enough niche so that you can provide that true differentiation discussed above. Your investors may want you to attack a huge market, but if you don't have that influence pushing you in that direction, pick a small area that you can have a higher chance of dominating when you're new. If you are successful in your initial niche, you can then broaden out into adjacent segments. Down the road, maybe you take on the giant "head-on"; but starting out is NOT the time for this.

Raise more money than you think you will need - Every once in a while a new company will "hit on all cylinders" from the very beginning. But in my consulting practice at PJM Consulting, I rarely see this. In fact, a good part of my practice is helping companies "pick up the pieces" after their initial business plan or execution has gone awry. No one likes to give up more equity than they need to, but things usually take longer to start working than you initially project. There are usually too many things that you don't know, until you really get into the marketplace. Plus, it's generally easier (and cheaper!) to raise a bit more money at first, than it is after that first misstep. A little extra funding in the bank can be a good insurance policy against a capital crisis early on.

DON'T try to be like them - A common mistake that I often see early stage companies make is trying to "be like the giant competitor". Sometimes this comes from an inferiority complex, and sometimes because the founders come from one of the giant companies themselves. The last thing you want to do is create a big company bureaucracy. In most ways, you want to operate VERY DIFFERENTLY from you huge, slow-moving competitor. Resist the urge to create huge amounts of process before your company size dictates it as necessary. Be very careful about hiring away senior executives from you giant competitors, unless you are certain that they also have successfully operated in an early stage company before. Stay as fast and nimble for as long as you can--that is a primary advantage at this stage of a company's development.

Recognize the giant's execution weaknesses and beat them there - Analyze the large competitor's business, and try to create your differentiation where they are weakest. It could be faster customer service, better channel relations, better ease-of-use, etc. If you concentrate your differentiation where they are doing the poorest job, it will accentuate the difference to the marketplace, and you will have a better chance of your advantage being recognized.

Focus, Focus, and Focus - This advice can be viewed as the culmination of the points above. Make sure that you don't try to do any more than you can do EXCEPTIONALLY WELL at this stage. You can always expand your focus later. Remember, there is a good chance we would all be speaking German, if Hitler hadn't prematurely opened up a second front with Russia in World War II. The tech landscape is littered with companies that followed an analogous strategy, with similar disastrous results (Novell and Netscape are two former high-flyers that immediately come to mind).

SUMMARY

As an early stage company entering a market where a major company or two are the known leaders, make sure that you don't "bite off more than you can chew". You can always expand your focus after initial success. Contracting your focus is usually quite a bit more painful, and many companies don't make it through that transition. That's my advice on how to attack a large, entrenched competitor. As usual, I'd be interested in seeing your comments.

Phil Morettini
PJM Consulting
www.pjmconsult.com
pm@pjmconsult.com

Which Online Advertising Platforms Should You Include in Your Marketing Mix?

I often write about online marketing, as many of my regular readers know. A frequent topic of mine is Pay-Per-Click (PPC) advertising, also known as Cost-Per-Click (CPC). Occasionally, people will refer to this marketing vehicle as Search Engine Advertising. What you're hearing this called more and more is "Google Adwords".

HAS GOOGLE ADWORDS "BECOME" ONLINE ADVERTISING?

Of course, its kind of like asking for a "Coke" when you want a soft drink, or "Scotch Tape" when you are seeking sticky-backed tape. It's the age old story of a brand DEFINING the category itself, and usually happens when a product becomes dominant in a market segment.

The conventional wisdom these days is that Google has basically won the Online Search Engine-based advertising wars, so don't even bother with any of the other advertising platforms out there. This topic is the very reason for Microsoft's recent offer to buy Yahoo for a gazillion dollars; they are motivated to do this because Google is so far ahead that they don't appear able to catch up on their own. This raises the issue of two also-rans in a market, combining to take on the market leader--which usually ends in disaster--but we'll leave that for another discussion…

Back to the main question, should you focus your online advertising energy and budget strictly on Google Adwords, or broaden your campaign to other platforms? I have an opinion, of course, and I'd like to illustrate that opinion with my own pragmatic advertising experience, as well as some more theoretical marketing theory which has served me well across a variety of markets. Let's start with the theory, using an experience from my past to illustrate my viewpoint.

MARKET NICHES: HIT'EM WHERE THEY AIN'T

As markets develop, conventional wisdom usually instructs you to "get on the bandwagon" of the market leader, and don't waste your time "where the action isn't". Back in the 90s when I was running a systems & network management software business, Novell Netware had the overwhelming share of the Network Operating Systems business--roughly a 70% share. As a result, most of the companies in our general space focused on making their add-on products compatible with the Novell platform. They ignored two other competitors: Microsoft LAN Manager and Banyan VINES. There were almost no add-on systems management products available for these two platforms. We ported our applications to these two platforms, with excellent payback. Not only were we able to make easy sales to the customers of these two NOS vendors due to lack of competition, these secondary platform vendors supported our efforts to a much greater degree than Novell, where we were one of many. In addition, it turned out that while Banyan (and too a lesser extent LAN Manager) had much higher market shares in the coveted Fortune 1000 market than they did the market as a whole. Many large companies also had mixed networks containing two or more of these NOS platforms--we had a major strategic advantage in these large accounts, due to our cross platform support. The first lesson here is that sometimes it really pays to segment a market a bit differently. In some cases, in segments important to you, the market leader isn't nearly as dominant as overall market share data would lead you to believe. The second take-away is that smaller market segments are often DRAMATICALLY less competitive, allowing you to efficiently grow revenue without huge marketing outlays to "get above the noise".

MY OWN EXPERIENCE WITH THE MAJOR ONLINE ADVERTISING PLATFORMS

I run PPC advertising campaigns for several of my clients. Let me make something clear right away--there is no comparison between these three advertising platforms. Google Adwords is the clear winner, hands down. It's not close. Adwords is both by far the most robust and easiest to use, which is quite a statement. Adwords is a great piece of software, which Google is constantly evolving and improving. You can do almost everything you want and there is excellent online help if you do have a question. If you ever really do need a live person, help is available, even if you are spending a modest amount on advertising with Google. It is a pleasure to work in Adwords. Plus the fact is that by far the most volume of searches is available on this platform.

Yahoo Search Marketing (formerly Overture) comes in second place. This is the original search advertising platform. It's not nearly as robust as Adwords, but the recent major upgrade at least brought the software into the modern ages--it was pretty stagnant for a very long time, allowing Google to surge into a commanding lead. The basics are covered, and it's pretty intuitive--although if you are used to working in Adwords, the subtle differences can drive you a bit crazy. And there are a few things that are simple to do online in Adwords, that you have to call and request over the phone to make happen in Yahoo's platform--but at least they are very nice about it.

And then there is Microsoft AdCenter. What can I say about Microsoft; it is the typically excruciating experience dealing with them. They dominate most markets they are in, and have that arrogant way of dealing with you that only a monopolist has. When you have 90% of the OS or word processing market, you can get away with lousy support, vendor-centric policies and non-intuitive software. But they are a distant third in this market, and they aren't gaining on anyone. So these weaknesses stick out like a sore thumb. This is the newest platform. The software isn't all that hard to use, but in Microsoft fashion they have created some of their own conventions in opposition to market terminology, and the application doesn't always behave in a way you would expect. Add in the unbelievable support mentality, not to mention the fact that they are a distant 3rd in traffic, and you realize why they are last among the major platforms. As an example of their attitude, when I decided to look at Microsoft's offering, I wanted to import my Adwords campaigns into Adcenter to save a BUNCH of time, which the Help function stated that I could do. Makes a lot of sense for a new user, right? Well, I couldn't figure out how to do it in the software, so I called Adcenter support to ask how. I was told that I needed to be spending at least $11,000/month to have access to that feature! There's a classic catch 20--not allowed to import all your campaigns into a platform (which will enable you to spend money in that platform), until you're spending over $100,000/year. Brilliant market penetration strategy! Whoever is making decisions at Microsoft has no idea how to compete--which I guess isn't surprising for a monopolist. No wonder they are trying to buy Yahoo….

SUMMARY AND RECOMMENDATIONS

Adwords is clearly the best platform, so why bother with the other two? Remember the discussion about niche markets above. Although Adwords is by far the best, as a result, it's also the most fiercely competitive of the three--meaning costs are high and margins are sometimes lower. It really varies by market segment, but in some segments, Yahoo Search Marketing and Microsoft Adcenter are neglected, leaving excellent bargains on important keywords. I am currently running a campaign on Adcenter for a client in a very niche, technical market, which isn't supposed to be well suited for MSN search traffic. This campaign is doing VERY well. So the moral of this story is don't pick one--use all three, as long as you're making money on each of them. This is the beauty of PPC marketing, after all. It is quite easy to test to see if it will work for you, and objectively track your results.

That's my take on the three major search marketing platforms--I'd love to hear yours. Post a comment so everyone can benefit from your own experience.

Phil Morettini
PJM Consulting
http://www.pjmconsult.com/

Windows Vista - What will it mean for Microsoft?

As everyone who hasn't been secluded in a cave for the past couple of weeks knows by now, Microsoft recently announced release of its new Windows Vista operating system to its large business clients. I'm sure that the timing of this announcement has been well thought out-and who am I to question it, really?

But on the surface at least, it's pretty curious.

CURIOUS INTRODUCTION STRATEGY

First of all, they didn't shipping the consumer versions first, even right before the Holiday shopping season, the period during which the bulk of the annual volume of PRACTICALLY ALL RETAIL PRODUCTS is sold. This is a huge hit to Microsoft's sales, as well as their retail partners, system manufacturer partners, peripherals manufacturers, etc. Really, its a major hit to the whole Windows eco-system, because Windows upgrades drive upgrades of everything else.

In addition, they DID ship it to their large customers--right as the Holiday Season started. First of all, these large customers are notorious for lagging in terms of Hardware and Software upgrades of any sort. They are large, and everything takes them a while to do. But they also need to test and modify custom internal applications, and with something as fundamental as a major OS upgrade, IT shops really want to wait and make sure most of the bugs and issues are worked out, prior to undertaking massive upgrade conversions. I've seen estimates that this customer class won't start upgrading until the 3RD Quarter of 2007. It seems like a delay of a few weeks wouldn't make much of a difference.

So what was the hurry? Beats me. Again, on the surface, it seems like a case of misplaced priorities. Sure looks like I would have put every man possible on getting out the consumer versions, and saved the Enterprise versions for later. But I'm sure that there are good reasons that and outsider like me is not privy to, why this wasn't desirable of possible. I'm guessing that Microsoft would probably say that the consumer versions have more testing/QA required, and it just wasn't possible to get the consumer versions on the shelf by the Holidays, no matter the resource allocation. They've already missed several Holiday Seasons with the extreme delays on Vista, so what's one more, anyway? So I'll give them a pass on this one.

WILL MICROSOFT REMAIN DOMINANT?

But the bigger question here, besides the nitpicking about timing, is what will Windows Vista mean to Microsoft in the longer term? Will this launch, much hyped by the company for what seems like forever, be a point of inflection for their fortunes--refreshing their sales momentum, and restoring their dominance? Yes, I realize that the guys in Redmond aren't exactly on the way to bankruptcy at this point. Microsoft remains a cash machine, enjoying outsized margins, generating enormous profits, and remaining a feared competitor for MOST of the software industry.

But it does seem like the company has slowly lost a bit of its edge the last few years. People in the industry retain a healthy respect for them, but it's not quite the same. It wasn't too long ago that VC's were designing their portfolio's around NOT competing with Microsoft. If you put a company together that was going to compete with them head-on, you risked being laughed at, and having your spouse nervously requesting that you see a psychiatrist. For quite of while, going out of your way trying to compete with them just WASN'T DONE.

That has all changed.


VISTA HELPS MICROSOFT, BUT WHAT IS WORKING AGAINST ITS CONTINUED DOMINANCE?

1) The OS is still important, but the Internet and Web-based application development has changed the landscape considerably. While the OS is still extremely important, instead of being a POSITIVE competitive weapon that Microsoft controlled to provide advantage for their own applications, it has come to be perceived as a high-cost security problem that has left the company on the DEFENSIVE. The application platform of choice for end user interfaces going forward appears to be the Web, for a lot of reasons that we won't go into here.
2) Even on the OS server side Microsoft is under attack, with "free" Linux providing a much lower cost solution with greater stability and security--according to many large corporate IT shops.
3) The Web has evened the playing field for the competition. Like most large companies, Microsoft has struggled to keep up with the changing rules of the game. They have been a step or two behind for a while, but have always been able to catch up in important new markets, using the fast follower approach. But with a continuously lessening advantage from their near-monopoly platforms, it's getting harder for them to come from behind and dominate markets. Google is currently kicking their butts in Search--the most high profile example.
4) The final major threat is the advent of advertising-driven business models, which threaten to put a large dent in the classical paid licensing model that is a huge cash cow for Microsoft. It is always hard for the large, entrenched leader to obsolete their revenue model/streams.

I believe that Microsoft is struggling greatly with these issues.

Finally, the fear of the company just isn't there anymore. People will still tread carefully in their footsteps, but the company is definitely going to be facing increasing competition by upstarts using novel approaches in the coming years. This will stretch the company that much further, as they are required to respond to competitive threats across a much broader landscape than in the recent past.

HOW GOOD IS WINDOWS VISTA-THE PRODUCT?

What about Windows Vista the product? How good is it? I haven't gotten my hands on a copy personally, but everything I have read to date leads me to believe that it is a solid--but fairly pedestrian at this point--step forward for the Windows OS. One major IT magazine's analysis was that the code is solid, and it should prove to be a good platform for improving security in the long run. There is also wide belief that it will help IT shops manage their PC assets more easily and cheaply. But others have stated that everything Vista enables concerning an IT shop could today be implemented by a well-run IT department with Windows XP. This is hardly a ringing endorsement after 5 years, and many slipped intro dates. While it may be fundamentally better for security, Microsoft has a huge problem with the Windows OS, no matter how well they design and code security changes. Any system can only be "hardened" so much. With such widespread use, Windows has a big target on its back from every hacker in the world. Also, as the OS becomes more naturally complex and sophisticated in capability over time, that many more holes open up for people to attempt to exploit. I believe it is ultimately a game Microsoft cannot win.

From a consumer's perspective, the sexiest new feature is the 3D user interface, which requires a very high end graphics subsystem. But the problem here is that for most people, this is projected to be a $500-700 upgrade. Again, systems and peripherals manufacturers will love it because it pulls hardware sales--but the new hardware requirements should slow adoption by consumers.

Of course, much of the fancier improvements to the Longhorn project had to be dropped as the coding slipped. So I'm sure there are many incremental improvements that will occur in Vista in the coming years. But remember, this was billed by Microsoft as a great leap forward, for many years. It looks at this point like an incremental upgrade--not a revolutionary one.

THE BOTTOM LINE

So what's the bottom line for Microsoft with its new Windows Vista OS? It's always very dangerous trying to predict the future in high tech. The law of unintended consequences looms large, and those consequences usually aren't readily apparent until much later. But if I had to project today, I'd say that Vista will provide Microsoft with a nice short and medium term sales boost. But I also believe that it will do nothing to slow down the powerful forces already in motion, that are slowly eroding the Microsoft near-monopoly, and may eventually make it simply a "mortal" company again.

That's how I see it--post a comment and let us know your view.

Phil Morettini
PJM Consulting
www.pjmconsult.com