Clouds in the sky
For years Microsoft's Windows logo often appeared against a blue sky with cottony clouds. But the cloud has become one of the company's biggest threats. The operating system matters less when programs can be provided online. Moreover, online software can be delivered to customers more cheaply, there is immediate feedback from users and applications can continually be improved. Those are big advantages over software sold in a box, one version at a time.
In the past Microsoft tied its operating system and applications together by ?commingling? the code (and ran afoul of antitrust authorities for doing so). The rise of online applications threatens the primacy of Windows because the network becomes the platform for the software. It does not mean PC operating systems are unnecessary, just that it is increasingly the cloud, and not the PC, that is the launch pad for computing.
This suggests new ways to sell software. Instead of charging for each shrink-wrapped box, firms can sell programs as a service, collecting monthly payments, or giving them away and earning money from advertisements.
The third difficulty facing Windows and Office is security. Much of the justification for Vista among Microsoft's managers was to improve security. Governments and large businesses had voiced concern about the omnipresence of Microsoft products and a rash of hacks and viruses that exploited holes in the firm's software.
But there was a big problem. In the past, each new version of Windows was written on top of earlier ones. The code became gangly. It resembled sedimentary rock with the occasional fossil of a long-lost feature or inadvertent vulnerability.
Vista was meant to clean up all this debris. Its code was written from scratch?a large part of the reason for its delay. Yet plans for ambitious new features, such as a powerful way of searching the computer and a new method of storing and retrieving files, called WinFS, were cancelled in 2004 when it became apparent the technology was too difficult. Already behind schedule, Microsoft decided to rush out a release. In December, within days of Vista's being made available to businesses, researchers identified security lapses?even though America's National Security Agency helped to harden it. Are there other vulnerabilities? Nobody will know until Vista is more widely used.
No matter how many resources Microsoft pours into making its software secure, some flaws are inevitable. But the company has also been trying to make security a source of revenue. It established a system ensuring that security updates go only to legitimate buyers rather than those with pirated copies. Yet any insecure PC can harm everyone, because all are vulnerable to one Typhoid Mary.
Microsoft initially planned to prevent other firms' security software from accessing the ?kernel? of Vista, in effect the heart of the system. This could render rival products less effective. Although protecting the kernel from malicious code makes sense, some companies argued that it was yet another attempt by Microsoft to use its operating system as the ticket into another market, as it did with browsers and media players. After the European Union complained, Microsoft backed down and provided a form of access.
Although Microsoft is defending itself against some of the biggest trends in computing, it will not be unseated anytime soon. Indeed, the company has often said its biggest competitor is itself: previous versions of its products worked well enough, so many customers would not bother to upgrade to newer ones.
This time Microsoft has put aside any complacency. In the past 18 months the company has reorganised its divisions and put managers from a commercial background in charge instead of their technical colleagues. This counts as a big shift in what was always an engineering culture.
Bill Gates, who as chief software architect was in large part responsible for the earlier, failed vision of Vista, has given up his role. His successor is Ray Ozzie, a relative outsider who joined when Microsoft bought his company in 2005. Mr Ozzie is trying to ?webify? Microsoft's products. Greater discipline is expected too. Steve Ballmer, the chief executive, vows that there will be no more long delays between new product introductions.
