Four ways Microsoft will make it increasingly difficult to stick with Windows XP

Enterprise installed base. Source: Forrester

When Microsoft (MSFT) launches Windows 7 next week, its biggest competitor — especially in the multi-user enterprises that are its target market — will not be Linux or Apple's (AAPL) Mac OS X, but Windows XP.

Eight years after its launch, and nearly three years after Microsoft began shipping Windows Vista (its putative successor), XP is still the operating system most likely to be installed on a new PC in 81% of IT departments, according to a new Forrester Research poll.

Microsoft made it easy for IT decision makers to do what they are naturally predisposed to do — stick with what they know. Steve Balmer is not going make that mistake again, judging from a report published Thursday by Forrester analyst Benjamin Gray.

"Factors are converging," he writes, "that will provide IT managers with a compelling reason to shake the status quo, finally ending Windows XP’s corporate reign."

Gray, who last year give his clients five reasons to switch to Vista, now offers the timetable by which Microsoft will make life increasingly difficult for anyone who wants to keep supporting Windows XP.

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After the Vista debacle, Microsoft changed the way it makes software. The result – Windows 7 – is winning raves. Can a new operating system (and a new attitude) help the company take on Google?

With Microsoft's founder and chairman, Bill Gates, trotting the globe in a quest to abolish diseases, his handpicked successor, CEO Steve Ballmer, has had most of a decade to move the company beyond its two biggest cash cows, the Windows operating system and the Office productivity suite. So far, not so good.

The company's web forays, such as MSN, have only highlighted the dominance of Google and Yahoo. In software for smartphones, there is Apple, RIM (RIMM), and everybody else. MP3 players? Microsoft's Zune hardly merits a mention. And even the core franchise has suffered. In the face of slowing PC sales and the economic pall, Microsoft's fiscal 2009 revenue actually contracted, to $58.4 billion from more than $60 billion in fiscal 2008 — and the company missed its earnings estimate by more than $1 billion.

Fresh Coat of Paint: Artist Ricardo Richey, commissioned by Fortune, spray-paints a street-smartversion of Microsoft'sname and Window's logo on a San Francisco wall.

But the biggest failure under Ballmer's tenure was self-inflicted. Vista was meant to be a wholesale reimagining of Windows, the brand name for Microsoft's operating systems dating back to the early 1980s. Every so often the company unveils a new OS, blandly named for the year of the release (Windows 95, Windows 98) or a geeky abbreviation (Windows XP is short for Windows Experience). Vista had a marketing-friendly moniker, a fancy user interface, new security architecture, a better file-storage system, and much more. More

I got a thoughtful message last week from Jim Neal, a retired advertising and PR guy who owns a little Apple (AAPL) stock and spends a lot of time following its ups and downs.

Lately he's been trying to make sense of Microsoft's (MSFT) Laptop Hunters TV ads — the ones where ordinary Americans are given a budget and a wad of cash and set loose in a computer store to buy a PC.

Microsoft aired the fifth spot in the series last week (pasted below the fold), and Apple for the first time answered back with a couple Get A Mac spots. See here and here.

"Microsoft's anti-Apple ads," Neal writes, "are generally considered a response to Apple increasing market share, something generally believed to be at the expense of Windows market share [and] made possible due to the failure of Vista to deliver.

"All that may be true, but the decision was a poor one. I'm guessing it was made by Steve Ballmer, clearly a more visceral, shoot-from-the-hip guy than Bill Gates.

"Would Gates have made the same decision? Possibly not. He may have opted to continue to ignore Apple's inroads and put all his efforts into making sure Windows 7 was all that it could be. With the new campaign, the heat will really be on Microsoft to deliver with Windows 7.

"Gates may well look at the current Microsoft ad campaign as a mistake and much as [the ads] may delight some people in their camp, he'd be correct.

"The moment Microsoft decided to attack Apple, they increased Apple's credibility. That's a given any time you decide to respond to an opponent you previously didn't acknowledge even had right to get into the ring with you.

"Further, any marketing pro looking at the issue would know that (1) Apple's rabid fan base would react strongly and do all it could to poke holes in the validity of the campaign, thereby further raising the level of the debate, and (2) Apple would eventually decide to enter the fray, making the need to produce an iron-clad argument against Apple all the more imperative.

"After all from Apple's perspective, Microsoft has done them a favor by putting to a larger the audience the key question, 'which combination of OS and hardware is better for the user?'

"Anyone who has taken time to dissect the Microsoft ads (as so many have), knows they're full of holes big enough to drive a truck through.

"Microsoft clearly knows this. The ads didn't just accidentally end up being crafted in a way that's quite misleading. The problem for Microsoft is that they really, really felt compelled to take on Apple, so much so they did it even though they didn't have a leg to stand on. Someone promoted the argument that in the current recession, Apple's weakness was price. It's a weakness, but not as big a one as Microsoft wants to believe, not based on Apple's sales.

"Microsoft went with it anyway. They could have just said, 'we're less expensive, so if you don't have much money, we're the only game in town,' but that wasn't enough.

"So they created a false premise, that Apple products are over priced for what they are, that Windows machines give you more for the money, and they manufactured a set of conditions intended to support the false premise.

"Why Microsoft continues to view their market dominance as proof they have a better product is beyond me. It's the type of thinking that can really kill a company in the long run, the type of thinking that leads one to make really stupid decisions.

"It's like Goliath not only stepping into the ring with David, but handing him the stones to put in his sling and urging him to fire away.

"The Ballmer decision, I think, was a knee-jerk reaction not only to Apple's increase in market share, but to concerns raised by its largest clients, Dell (DELL), HP (HPQ), etc. It was done at a time when Microsoft is at its weakest, the very time when they needed to take the high road and ignore Apple. It was a very stupid marketing decision.

"But Ballmer couldn't take it any more. He took the bait, set out by Apple through its Get a Mac ads.

"To paraphrase Star Trek's Captain Kirk: 'Now we've got them right where they want us.'"

ADDENDUM: Neal doesn't mention it, but Bill Gates would be even more embarrassed if he knew what some people are saying about the format of the Microsoft ads. The image of a young woman being handed a fist-full of cash is apparently a visual trope used quite frequently in a very different kind of film. See Laptop: Porn Hunters.

See also:

• How Microsoft put Apple users on the defensive
• All about Microsoft’s ‘Lauren’
• Is the Apple press falling into Microsoft’s trap
• Apple slaps Microsoft with rubber chickens

Below the fold: The latest Laptop Hunters ad.

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UPDATE: Microsoft's own tests find IE8 faster than Firefox. See links to pdfs here. Independent reports treat the company's tests somewhat skeptically. See here and here.

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I have not tested Internet Explorer 8 — the new version of Microsoft's (MSFT) industry-leading Web browser, which was released here on Thursday. And since Microsoft has made it clear that it has no intention of writing a version for the Apple (AAPL) Macintosh, I may never use it.

However, I've gone through the promotional videos and read some of the early reviews, starting with Walt Mossberg's in the Wall St. Journal, and I gather it's a significant advance over IE7 with some fine new features and none of the obvious flaws Vista had coming out of the box. But it has a fundamental problem. As Walt puts it in the last graph of his laudatory review, damning IE8 with faint praise:

"If it were faster, I would say it was the best browser currently available for Windows." (link)

Microsoft's new browser, according to Mossberg (who is backed up by independent tests  — see here and here), is slower than Firefox, Google’s (GOOG) Chrome, and even the Windows version of Apple’s Safari 4. Which makes me wonder whether IE8 might do for Microsoft's dominant position in the Web browser market what Vista did for Microsoft's monopoly position on the PC desktop.

What am I talking about? Let's go to the pie charts below the fold.

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Twenty three were nominated. Nine were selected as finalists. But only one could take home top prize in the first-ever Fiasco Awards ceremony, held Thursday night in Barcelona, Spain.

And the winner was …

Microsoft's (MSFT) Windows Vista, garnering 5,222 of 6,043 votes (86%) registered via the Web. The successor to Windows XP was cited for being over-hyped, overly complex and riddled with incompatibilities.

A quirky, slightly tongue-in-cheek project of the Catalan Association of Telecommunications Engineers, the Fiasco Awards are designed not to "criticize" or "engage in public derision," according to their website, but to recognize that "technological advance is not a straight path" and that "success and fiasco are … head and tail of the same coin."

"God rewards fools," reads the award's logo.

Using a balloting system weighted to ensure that "an opportunity was given to local projects," a consolation prize went to SAGA, the Administration and Academic Management System of the Catalan Government.

The nine finalists were all over the lot, mixing the famous, the local and the obscure. The list included One Laptop Per Child's $100 computer; Linden Lab's Second Life; Google's (GOOG) Lively; the DAB digital radio system used in Europe; the Madrid-based Mobuzz.tv project; Maresme Digital, a project for bringing digital television to Catalonia; and some Linux-based free software packs distributed by the local government administration.

Vista made a particular strong impression in Catalonia because it was the first version of Windows that could be purchased in Catalan, the language of the region.

"Edison made over 1,000 attempts before inventing the light bulb," according the awards' press release, "so he learned how not to do it in more than 1,000 different ways… "

Edison's example could be applied to the Fiasco Awards themselves. Maybe they'll be better next year.

Via: SciAm.com

Apple's (AAPL) slice of the Internet pie grew measurably in November as both the Mac and the iPhone hit record numbers in a Net Applications Web survey issued overnight Monday and updated Monday morning.

At the same time, Microsoft's (MSFT) Web presence crossed two psychological barriers, with Windows' Internet share dropping below 90% for the first time and Internet Explorer's market share retreating to less than 70%.

The Mac's share of Web hits, having lost ground in October, grew 8.04% in November to a record 8.87%, according to the Web metrics firm's preliminary corrected data. The iPhone's gains were sharper: up 12.12% to 0.37%.

(Linux grew even faster, up nearly 16.9% for the month, following a 22% drop the month before.)

Windows' share slipped nearly 10% to 89.62% as Vista's gains failed to make up for sharp losses by Windows XP.

Internet Explorer's shrinkage — down 2.1% to 69.78% –  was largely due to gains by Mozilla's Firefox, which topped 20% for the first time in November.

"Reaching 20 percent worldwide market share is a significant milestone for Firefox and Mozilla," Mozilla CEO John Lilly told Net Applications. "It's a huge achievement by the global Mozilla community, one that just a few years ago most would have considered impossible."

Net Applications' monthly surveys are conducted by sampling browser data from some 160 million visits to Web sites operated by firm's clients. Although the company describes the results as “market shares,” Net Applications does not actually measure share of market in the traditional sense of sales revenue or unit sales. It does, however, provide a consistent methodology by which to measure browser and operating system trends.

To see Net Applications’ Nov. 1 report, click here. The results are summarized in the tables below.

These monthly reports, however, mask considerable variation from week to week and day to day. To get a sense of how variable web browsing patterns can be, see the see-saw graphs below the fold created by Financial Alchemist's Turley Muller, who has been tracking Net Applications' daily reports since last June.

Below: Muller's daily tracking of Mac and iPhone Internet shares.

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This seems to be the season of lists, the bread and butter — however stale — of journalists facing a slow news day.

This one trods the most familiar ground in computerdom, pitting Apple (AAPL) Macs running OS X against PCs running Microsoft (MSFT) Windows. But it comes from APC, the longest running computer magazine in Australia, and it's unusually insightful.

I post only the intro and the topic headers here because I recommend you read it in the original, complete with well-chosen examples, clever illustrations and charming Britishisms.

Here's how APC Web editor Dan Warne sets it up:

15 reasons Macs are still better than Windows PCs

A journalist colleague of mine recently put this question out there:

"I'm sure I'll either get ignored or flamed for this but what's with all the pro-Mac stuff at the moment? It seems as though everyone […] is either using or recommending Macs these days.

I'm not wanting to start a flame war here but I'm genuinely interested in why this general shift has occurred.

Do people think Vista is truly that awful that they can't use it or even recommend a normal Windows desktop/notebook? I use it every day and I admit I don't like it much either but I don't think it's that bad that I'd jump to using or recommending a Mac instead…"

I long ago stopped actively seeking out Mac vs PC discussions (partly because Macs are now PCs — so the argument is more about Mac OS X vs Windows vs Linux than a proprietary Mac architecture vs an x86 PC architecture), but I still find it confounding that after all these years, people still don't know the basics of the upsides of Macs and OS X. Perhaps it's because of the tiresome arguments from people like this.

So here's my answer. Note, despite what I said above about the argument really being between operating systems these days, I've looked at Macs as a hardware and software combination in this article, pitted against regular PCs running Windows. (link)

Warne's 15 reasons (topics only). For the full article, click here.

1. Reliable sleep mode
2. Extremely fast boot times
3. Apple uses good quality parts
4. Less blinking lights
5. OS X + Windows is better than just Windows
6. Easier to troubleshoot Macs
7. A culture of good quality community software
8. More useful apps out of the box
9. Neat and contained system settings
10. Apple doesn't load the system up with crap
11. Tonnes of small reasons make Mac OS X better
12. Still no need for additional security software
13. Apple seems largely to be lameness free
14. Power of the Linux command line with Photoshop CS4
15. File sharing is much easier

Once again, for the full article, click here.

[Illustration courtesy of apcmag.com]

How do you explain this one?

The monthly Market Share survey from Net Applications, which had reported steady increases for the Mac OS in the previous two months and sharp growth for the iPhone — including a 57% surge in August — showed a very different picture in the October report issued overnight Saturday.

In October, iPhone growth slowed to 3.12% (down from 6.67% in September) and the Mac's share actually fell, down 0.24% from September. (Linux was particularly hard hit, down nearly 22% for the month; see charts below.)

Windows, meanwhile, got a little bump — up 0.19% — thanks to a healthy 5.24% jump in Vista's share.

How did this happen?

The first thing to be said about these results is that Net Applications' "market share" report doesn't actually measure share of market as a percentage of revenue or unit sales. That's the business Gartner and IDC are in. And in Gartner and IDC's latest reports, Apple's (AAPL) share of the U.S. market had grown to 9.5% and 9.1% respectively, largely at the expense of the HP (HPQ) and Dell (DELL) (see here).

What Net Applications does measure — based on browser data from some 160 million visits to websites operated by Net Applications’ clients — is the extent to which users of each operating system are hanging out on the Internet.

In other words, what the Web metrics firm's latest data show is that in October, Windows users — and Vista users in particular — were coming online at a faster rate than Mac users. This despite the fact that Mac sales grew 21% worldwide last quarter according to Apple, and roughly 30% in the U.S. according to Gartner and IDC.

So what was it about October that drew Vista users to the Web in greater proportion than Mac users? Could it have something to do with Microsoft's (MSFT) $300 million ad campaign for Windows? Was it PC users obsessively tracking poll numbers in the U.S. presidential race? Could it be related somehow to the meltdown of the global financial markets?

While you ponder that, here are summaries of the latest Net Applications reports, broken down first by OS and then by different versions of those operating systems. To see the full results, click here.

"Developers," a VP at Electronic Arts once told me, explaining why there were so many me-too Windows applications, "will walk through the desert in their socks to get to an installed base."

True enough. But it doesn't quite explain the results of a survey issued last week by Evans Data Corp. The headline was that most developers are still not targeting Windows Vista when they write new apps. Only 8% of the 380 developers surveyed were writing for Vista; 49% were still targeting Windows XP.

That makes sense, given that XP still enjoys a 73% market share, compared with less than 15% for Vista, according the latest NetApplications report (link).

What is harder to justify, using the desert-and-socks rule, is the sharply increased interest in non-Windows platforms. The press release didn't mention it, but Evans Data CEO John Andrews did in an interview with Computerworld's Heather Havenstein:

"Open source alternatives like Linux continue to take on interest," he [said]. "As well, MacOS is also acquiring significant interest among North American developers. Although unlikely to displace Windows volume, MacOS experienced 50 percent growth as a primary development platform and 380 percent growth as a targeted platform during the period." (link)

We've asked Evans Data to clarify this quote, because in this form it's not particularly helpful. The 380% figure sounds suspiciously like a misquote, given that the size of the survey group was also 380. And that 50% increase is unanchored; it could mean 1 more developer writing for Mac or 100.

But any increase in Mac and Linux development is surprising — and encouraging — given that Microsoft (MSFT) still owns more than 91% of desktops, Apple's (AAPL) OS runs on 7.38% and Linux still hasn't cracked the 1% mark.

Could programmers be developing an interest in something beyond the size of the installed base?

Apple has no numbers to compare with the 140 million copies of Vista that Bill Gates says Microsoft (MSFT) has sold since the latest version of Windows started shipping in late 2006. (link)

Literally, no numbers. The last time Apple (AAPL) released a Leopard sales figure was Oct. 30, 2007, when the company said that it had sold more than 2 million copies of Leopard in one long weekend (see here). Apple reported $170 million revenue from Leopard sales in the December '07 quarter, but that represents fewer than 1.3 million copies. Apple also sold 2.32 million Macs that quarter, more than 2/3 of which probably had Leopard pre-installed.

Even so, the two operating systems aren't even playing in the same ballpark when it comes to raw sales.

Of course, Vista was greeted with brickbats and Leopard with raves, but Gates didn't dwell on that in Tokyo Wednesday, where he gave his Japanese partners an update on how Vista is doing. "That's a very rapid sales rate," he said.

Not necessarily.

"The most significant number," says Piper Jaffray analyst Gene Munster, "is Apple's upgrade penetration vs. Microsoft's. Apple estimated that about 19% of the OS X user base was on Leopard by the end of its launch quarter. By my math, Vista is used by about 12%-14% of the Windows user base more than a year after its retail launch."