Is Vista a Sacrificial Lamb?

What do you think of Microsoft's (Nasdaq: MSFT  ) Vista operating system?

Scratch that. I can't hear you from here, and it's a polarizing query. Let me see if I can come up with a question that actually has investing implications and can open up the responses to more than just "Vista rocks" or "Vista blows" in the comment box at the bottom of this page.

Hmmm. Got it!

How will history regard Vista?

The knee-jerk reaction may be to dismiss Microsoft's oft-knocked operating system. With Microsoft perpetually extending its XP kill date -- and supposedly rushing its Windows 7 replacement to market -- Vista is becoming less of a bridge between operating systems and more like a stepping stone.

At some point next year, the migration may be from XP to Windows 7, skipping over Vista completely.

If that's the case, history will regard Vista as a failure. I would prefer to characterize it as a martyr. It was the platform that willingly took one for the team as Apple's (Nasdaq: AAPL  ) "I'm a Mac" ads jackhammered the Vista brand into the ground. As Apple's market share grows and Dell (Nasdaq: DELL  ) ships out dirt-cheap miniature laptops with the Linux-flavored Ubuntu operating system, Vista isn't necessarily a loser. It just happened to be at the wrong place at the wrong time.

Three cheers for the Buena Vista Club
InfoWorld
's J. Peter Bruzzese is defending Vista this week. The cheering section is so thin that a rare bull really stands out. He's not alone, though. Bruzzese leans on data from a CDW survey through Walker Information. The study checked in on 772 IT shot callers familiar with Vista. The survey showed:

  • 48% indicate that they are evaluating, testing, or implementing Vista.
  • 30% are currently implementing or have already implemented Vista.
  • 50% who have made the Vista plunge rate the system "above expectations" on key features.

The numbers aren't exactly pretty. If Vista isn't winning over a majority of the IT decision makers at this point in its release cycle, it may never happen. However, the numbers are still better than 0%.

In other words, there is clearly a market for Vista. It's just a voice that hasn't been heard until Microsoft got its marketing campaign back on track with its new "I'm a PC" fleet of ads.

More than just Mr. Softy
Microsoft isn't the only company smarting over Vista's gradual Pepto-dismal coating of the country's computers.

Two years ago, it was computer makers like Dell and Hewlett-Packard (NYSE: HPQ  ) that were betting on a major Vista-fueled hardware upgrade cycle to improve their fortunes. Dell never got it, and HP's fortunes improved only as a result of new CEO Mark Hurd's margin-widening prowess.

Remember CNET Networks? The company behind tech havens like News.com, Tech Republic, and CNET.com blamed Vista's delay on a slowdown in advertising. When Vista finally did poke its head, CNET's finances didn't get any better. It found CNET going "glub, glub, glub" until CBS (NYSE: CBS  ) threw out a lifesaver.

Other casualties may be harder to CSI. If Vista was hot, wouldn't Circuit City (NYSE: CC  ) be in better shape? One can only imagine what an accessory king like Logitech (Nasdaq: LOGI  ) would be up to if Vista was such a smashing success that everyone was upgrading their systems.

In short, Vista's failure isn't just Microsoft's. A lot of companies are paying the price for the slow adoption, as they rip up their Vista racetrack wagers to bits.

Six feet blunder
"I say that Vista is alive and kicking," writes Bruzzese. "You 20 people who yell like you are 20 million are really starting to get on the nerves of the 200 million Vista-loving PC users out here who would spend more time debating with you, but we are too busy enjoying our Vista OS and don't have time."

I don't necessarily agree with Bruzzese, but I have to go back to Microsoft's costly marketing campaign for a little guidance before shoveling dirt over Vista's shallow grave.

Why would Microsoft spend so much money on the misguided Jerry Seinfeld ads -- and the more effective "I'm a PC" replacement spots -- if Windows 7 isn't ready? Is it a fashionably late response to Apple's attacks or an unfashionably early crank of the hype machine before Microsoft's next operating system? If it's neither, then the answer has to be that Microsoft wants to win Vista converts -- now -- before it moves the cheese in a year or so.

Either way, the strong marketing push actually finds Vista at the right place at the right time, for a change. It may not be much of a heartbeat, but it's at least enough to register a pulse.

Other ways to spend time with Microsoft:

Microsoft and Dell are Motley Fool Inside Value recommendations. Apple is a Motley Fool Stock Advisor recommendation. Try any of our Foolish newsletters today, free for 30 days.

Longtime Fool contributor Rick Munarriz has resisted the Vista plunge, so far. He does not own shares in any of the stocks in this story. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.


Read/Post Comments (8) | Recommend This Article (0)

Comments from our Foolish Readers

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  • Report this Comment On October 08, 2008, at 3:30 PM, scorp1us wrote:

    Vista is the Me of 21 century. Remember Millennium Edition? MS did it to kill of the 95/08 line and get people on XP. It was full of problems. Now Vista (V) is a new "platform" (I use that loosely) and with any platform there are headaches. The advantage to V was for MS only - MS knew this would be a transitional product. But it is an important one to get Windows7(7) to shine, assuring the problems in V don't actually happen in 7.

    The problem in 2008 is OSs are becoming a commodity. We have OSX at 8% and Linux at 2-3%. MS has the market share to survive, but eveytime they screw up the other two get stronger. At a disadvantage is Windows's legacy code base. OSX is a totally new OS, Linux increments faster. MS just can't make a major switch or increment fast enough. I predict OSX and KDE will be used at home, and 7 in the office, because of corporate support agreements.

  • Report this Comment On October 08, 2008, at 5:06 PM, RacerXHG wrote:

    I am in IT and like Vista very much!Unfortunately, I find myself recommending XP to all my customers. It is what we call bloatware. All the pretty eyewash is very demanding of hardware even in the stripped down versions. Just look at how the OS is compressed on a DVD now. With hardware getting faster, cheaper, less heat output, storage getting better (see INTC and SSD drives) and MSFT putting out a more efficient OS... We can hope! Maybe more of you should get involved in the Beta testing so we can have a stronger voice!

    PS: Windows Millenium was actually a very good OS for those of us who knew how to use it and keep it running optimally (msconfig's appearance).

  • Report this Comment On October 08, 2008, at 9:55 PM, Varchild2008 wrote:

    VISTA died as soon as people's DVD Rom drives and Printers and other devices died with it. I mean.. What is the point of plucking down $100+ for a piece of software that is not compatible with your printer? ? ? ?

  • Report this Comment On October 08, 2008, at 10:54 PM, APotOfGold wrote:

    After all the negative hype about Vista, I was leery when I got my new laptop.

    Now? I love it! When I had to use an old computer with XP for a while, I really missed Vista.

  • Report this Comment On October 09, 2008, at 8:11 AM, TMFBreakerRick wrote:

    Thanks for the feedback, everyone. Wow, two comments praising Vista in the same article? That must be some kind of record.

  • Report this Comment On October 09, 2008, at 9:45 PM, haranari wrote:

    Vista needed another year of beta testing before Microsoft "rushed" it out to market. That additional year of testing should have/could have worked on getting Vista compatible with esoteric things like, oh, printers, games, digital camera programs that everybody wants - and that Vista was not compatible with.

  • Report this Comment On October 11, 2008, at 6:40 AM, BullishBooyah wrote:

    I miss the days where things worked as intended out of the box - software was actually tested and thoroughly debugged well before mass production.

    Today it's all about maximizing profits at the expense of quality... Rushing products out prematurely and hoping a 'patch' can be implemented before enough people cry foul.

    Funny how Windows 98 boasted "faster performance" than 3.1, Windows XP also claimed the same against 98 but my W98 box would be completely booted up and ready to go while a faster computer running XP still said "Welcome"

    If Windows 7 has any major problems whatsoever I'm never going to pay for another Microsoft product again and I know there are many people who share the same feelings.

  • Report this Comment On October 13, 2008, at 10:02 AM, mstrmuzik wrote:

    The problem with Vista? It's that people don't embrace change. We became VERY comfortable with XP as it was around for quite a few years and Vista was markedly different. I've had Vista for two months now and enjoy it greatly over the 'dinosaur' XP!

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