One of the key assumptions we hear out of the bloodied big cap Tech bulls has been the upcoming release of Vista, the next generation Windows OS. Given Mister Softee’s size, its membership in the Dow, Nasdaq100 and S&P500, it is an obviously important equity.
I have differed from this crowd in that I assume the market has already discounted much of the new OS and Office software — their release dates are well known, the projected upgrade cycle and sales data is public.
What if, however, we are both wrong — and Vista slips its release data again? Consider the following update from GMSV:
"Some of Microsoft’s closest friends are warning the company in public what they surely must have been telling it privately — that the long-awaited and long-delayed Vista update of Windows still needs a lot of work. And if that’s true, Microsoft is impaled on the tines of a Morton’s Fork.
Robert McLaws, a .NET developer and Vista beta tester and blogger lays out a picture of a still-unstable Beta 2 version vs. a deadline crunch that just invites mistakes.
"I’ve been defending Microsoft’s ship schedule for Windows Vista for quite some time. Up to this point, I’ve been confident that Vista would be at the quality level it needs to be by RC1 [Release Candidate 1] to make the launch fantastic. Having tested several builds between Beta 2 and today, I hate to say that I no longer feel that way. Beta 2 was a disappointment on many levels. It was nowhere near as stable as it should have been, and was a huge memory hog."
McLaws advises pushing the launch from January (see "Don’t you know Lunar New Year is the new Christmas?") to the end of February, adding a Beta 3 version and taking the inevitable heat. "Don’t defend it, just announce it. There’s no point in trying to put a PR spin on it, because nobody is going to listen anyways. Let your thousands of beta testers cheer you for making the right decision, and tell Wall Street to go to hell," he writes. Among those bobbing in agreement was Robert Scoble, until recently Microsoft’s voice in the blogosphere. "If this ships [to the factory] in October, I will recommend not installing it and waiting for the first service pack. There’s no way the quality will be high enough to trust it if it ships early. I hope Microsoft takes the time to do this right."
Now, a 30-60 day delay is no big deal in the scheme of things. Since it misses the Xmas holidays, its far less important than say their iPod challenger missing the November 1 sales push by 60 days. Plus, we have long known that deadline problems at Microsoft are part of the environment; they don’t exactly surprise anyone anymore.
Still, with the retirement of BIll Gates, and continued management strife, GMSV notes that:
"Redmond is under intense pressure to get this sucker out the door. "Vista has become an almost uncontrollable beast, and everything depends on it," writes Ryan Stewart on ZDNet. "Vista is a monster; it’s big, complex, and central to everything Microsoft wants to do. According to people I talk to, WPF [Windows Presentation Foundation] won’t ship until Vista does. Couple that with the fact that the Expression suite is going to be delayed even further and the "Experience Hub" that Ray Ozzie talked about in his speech last week becomes more of a pipe dream. Vista is the key, and they have to drive adoption by releasing before the Christmas season. If people aren’t buying new computers with Vista this season, then Microsoft’s estimates are going to be way off."
So here are the options we may be looking at: An especially buggy January release of the new OS Vista — or yet another 30-60 day delay on its release. And people wonder why I am less than sanguine on big cap tech in general, and MSFT in particular.
I suspect big cap tech is nowhere near finished bottoming . . .
UPDATE: August 2, 2006 2:11pm
"Microsoft Corp. may have to wait at least a year for most U.S. companies to
switch to the new version of its Windows operating system, according to a survey
About 50 percent of companies either won’t deploy Windows Vista at all or
will wait at least 13 months after the system’s November corporate release to
begin installation, said Jupiter analyst Joe Wilcox, who surveyed 207 companies
with more than 100 employees. An additional 13 percent had never heard of the
new operating system.
The results suggest a setback for Chief Executive Steve Ballmer’s plan to use
Vista to revive sales growth in Microsoft’s $13.2 billion Windows business.
Windows runs almost 95 percent of the world’s personal computers, and Vista,
more than two years behind schedule, will be the first new version from
Microsoft in five years."
Vista testers to Microsoft: Even the bugs aren’t stable yet
GMSV, August 01, 2006, 11:02 AM
Businesses in no hurry to buy Vista
BLOOMBERG, August 1, 2006