Is 7 Microsoft's Lucky Number?

History repeats itself, or so I'm told. That's why I'm not ready to sign Microsoft's (Nasdaq: MSFT  ) death certificate quite yet.

By all accounts, Windows Vista was a massive failure. InfoWorld even named it the second-worst technology flop of all time, ahead of luminaries like the paperless office and digital rights management. "When the dust finally cleared, the new OS seemed like little more than a bloated rehash of Windows XP, touched up with fresh coat of 3-D-rendered paint," says Infoworld's written slap across Redmond's face.

Here's the good news for Mr. Softy and his faithful investors: the company has been here before. I have a cute, private name for Windows Vista: Windows ME 2.

The similarities between Millennium Edition and Vista are striking:

Similarity

ME

Vista

Previous Version

Windows 98, a huge success

Windows XP, another massive hit

Chief Complaint

Buggy hardware drivers

Buggy hardware drivers

Other Major Issues

Frequent crashes, unwanted new features

Elephantine system requirements, unwanted new features

And here's where the picture turns rosy: After ME, Microsoft learned from its mistakes, fixed a ton of problems with its latest non-starter product, and then unleashed Windows XP on a skeptical world. It was the first truly stable and reliable Windows version since, well, ever, and so good that many of us still use it today, more than seven years after its original release.

I think that Steve Ballmer can pull another rabbit like that out of his magic hat. Windows 7 is due no later than 2010, and it could see the light of day in the second half of this year. Word on the street is that much of the Vista bloat and clutter has been ironed out, and that this release could make everyone forget about the last mistake.

The rise of a new machine
Microsoft can't get this baby out the door fast enough. Seven years ago, Windows had no credible competition in the consumer and business-user markets. The ME flop only delayed a few million upgrade cycles and sales until XP came out and proved what it could do.

This time, Apple (Nasdaq: AAPL  ) has taken a serious bite out of Microsoft's market share, while running on the same Intel (Nasdaq: INTC  ) chips. Desktop Linux is getting better day by day, so Ubuntu and Red Hat (NYSE: RHT  ) must be taken seriously.

And far out in left field, Web 2.0 technologies and cloud computing are making Google (Nasdaq: GOOG  ) into a new threat, with Amazon.com (Nasdaq: AMZN  ) looking like an improbable dark horse. Who needs a premium operating system if every program you use runs on a Web server somewhere?

So you can bet your last dollar that Redmond is abuzz with serious efforts to overcome Vista's many failings. When Windows 7 hits store shelves, it has the opportunity to erase two years of bad press and disappointing sales -- and to start another huge success cycle that could beat back the burgeoning competition and cement Mr. Softy's place anew atop the heap of software giants.

The aftermath
Assuming that Microsoft can turn on a dime once again, like it did after ME, the opportunities are much larger in 2009. Where Win 98's red-headed stepchild had to settle for desktop systems and notebooks, a slimmed-down Windows 7 could become the standard platform for those products, plus netbooks, smartphones, and all manner of embedded systems. "7" will not only replace Windows XP, but a trimmer version could also replace CE and Mobile. If it's as good as the early reviews say, it could and should expand Microsoft's market in each of those segments.

So Vista walks off into the sunset to join ME, Apple Newton, and IBM's (NYSE: IBM  ) OS/2 Warp -- lost, forgotten, and not really missed. It's up to the sequel to restore Microsoft to glory and growth. I think it will happen.

Further forward-looking Foolishness:

Microsoft and Intel are Motley Fool Inside Value picks. Google is a Rule Breakers recommendation. Amazon.com and Apple are Stock Advisor picks. The Fool owns shares and covered calls of Intel. Try any of our Foolish newsletter services free for 30 days.

Fool contributor Anders Bylund owns shares in Google, but he holds no other position in any of the companies discussed here. He is a certified Unix admin, so this bright outlook for Windows sort of hurts a little. But we gotta keep it real, dog. You can check out Anders' holdings or a concise bio if you like. The Motley Fool is investors writing for investors.


Read/Post Comments (7) | Recommend This Article (31)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 02, 2009, at 4:38 PM, jasonsamuelsmpls wrote:

    Vista is not as bad as you're making it out to be. It does have some very nice features, and from an administrative standpoint is easier and more streamlined to configure a network with than XP. The biggest problem is its image. Microsoft (rightfully) got a huge black eye for overpromising on how smooth the launch was going to be, and that whole debacle over computers they labeled "Vista Capable." In order to run Vista with all of its features enabled, you need a fairly powerful computer - and even with some graphic elements disabled the background services take up a good bit of system resources. All-in-all though, if you have the horsepower to run it, Vista is definitely a step up from XP. But the negative image from its botched launch, Mac's ad campaign that keeps rubbing it in, and general ill will toward the platform just can't be overcome.

    That said, cut to Windows 7. It will run on the same OS kernel, or underlying code, as Vista - which means compatibility issues should be minimized. And the early word coming out is that it will trim down the background services to run better on lesser hardware. Assuming this is true, you're right that Microsoft will have learned and could have a winner on the horizon. You're also right about cloud computing services as a major threat to Microsoft. When complex apps can run via a web browser, the choice of operating system becomes less important. Personally though, I think the wave beyond cloud computing will be more of a hybrid utilizing smart clients that can leverage desktop processing power to access apps based in the cloud - so called "smart clients" such as Adobe AIR.

  • Report this Comment On January 03, 2009, at 2:21 AM, geekybob wrote:

    I enjoy reading people's views on Vista and Microsoft's mistakes surrounding that operating system when they're generally constructive. Sadly, this article is a classic example of completely biased reporting that borders on yellow journalism. Mr. Bylund is very open about his distaste for Vista, which unfortunately makes his statements next to worthless for someone that might be considering whether to purchase Vista. For example, the article doesn't address Microsoft's failed attempt at system security named "User Access Control (UAC)", which is a travesty. The article also makes much of so-called "hardware problems" that are greatly exaggerated. Everyone admits that Windows ME was a disaster, but anyone that compares ME with Vista makes me question whether they have actually used a computer for anything more than solitaire.

    Here's the thing - I run Vista on several computers with no problems whatsoever. I installed it on all of my desktop computers when it was released, and I've had no problems since then. NOT ONE. But I have to be honest - I have more powerful hardware than the average user. One of the things that Microsoft gets a lot of flak over is the hardware requirements for Vista, which are hefty if you want it to look as good as the Microsoft advertisements make it look. But let's be honest - when you buy a Mac you are buying both the hardware and the software, so there is an illusion of having no hardware requirements when upgrading a Mac because you're always upgrading everything at the same time. (Which is why I no longer use a Mac.)

    My point of all this is simple - if you're going to bash Microsoft for their blunders, do it in a way that aligns with the facts; don't just spew a biased, self-gratifying jumble of words that serves no useful purpose.

  • Report this Comment On January 03, 2009, at 3:04 PM, JimLosAltos wrote:

    While Microsoft bungled the launch of Vista and I'm disappointed in its lack of innovation, most of the criticism of Vista in the media is B.S. copied and pasted unthinkingly from Apple fanboys. This article regurgitates the same stuff.

    I use and like both Leopard on a MacBook Pro and Vista on a Thinkpad. In the last year, Leopard has crashed more often than Vista and exhibited more bugs. The main difference is that every Vista/Microsoft bug is reported in the press as if they were life threatening while hardly any of Apple's problems are reported. {Try to find mention of the fact that the "sleep" function on Mac notebooks didn't work for 7 months.}

    Granted, Tiger (the Mac OX before Leopard) was absolutely rock sold -- as was Windows XP SR 2. But that's not what's been shipping for a year+.

    And the latest gargantuan bug fix from Apple for Leopard may get it back to Tiger-level reliability. Looks good so far; my fingers are crossed.

    The main reason actual Windows users criticized Vista is that those people LIKE XP and 1) did not like giving up their XP interface for a Mac-like one and 2) Vista couldn't work with many peripherals XP supported (many of which wouldn't work with a Mac either, by the way I'm sad to report.)

    If Apple "failed' to the level of Vista's sales, it would increase Apple's sales by 1,000 percent. As for Ubuntu, have you actually tried setting up a desktop computer with Linux. As a desktop OS, Linux makes a great server (that's sarcasm).

    Again, I love my MacBook Pro and like my Lenovo Thinkpad. But consumers of both would be better served by objective commentary that would put pressure on both Apple and Microsoft to make real improvements.

  • Report this Comment On January 04, 2009, at 1:45 PM, constellationxiv wrote:

    Just a technical note. From the article:

    "After ME, Microsoft learned from its mistakes, fixed a ton of problems with its latest non-starter product, and then unleashed Windows XP on a skeptical world."

    Microsoft didn't fix any problems with ME. Instead, they departed from that platform all together (the MS-DOS based platform, also used with Windows 95 and 98) and thankfully opted to move over to the NT platform.

    Windows 2000 was released a bit more than a year before Windows XP and was also based on NT. Windows 2000 was widely regarded to be a very reliable and stable operating system and many people moved over to it before finally moving to XP. XP is basically a polished-up version of Windows 2000 (which could be regarded as Windows NT 5.0).

  • Report this Comment On January 04, 2009, at 11:10 PM, jnylen wrote:

    Eonsol beat me to it, but I think this article misses the crucial point of NT vs. MS-DOS. Microsoft did not "fix the mistakes of ME" with XP - instead they built on a completely different core operating system. They don't seem to have that option with Windows 7.

    I will try to leave my personal views out of the discussion (I use Linux exclusively now :D) but to me this means that Windows 7 will closely resemble Vista.

  • Report this Comment On January 06, 2009, at 1:14 PM, ExTRA11735 wrote:

    I have been using Vista since day 1 both on my business laptop and my home computers and I must admit it delivers what I need and I have no problems. at all. It is alos much easier to use and administer than its XP predecessor. Yes, it requires more powerhorse, but that the case for the Mac as well. I find it interesting that nobody is ever comparing from the HW perspective a PC running Vista and a Mac running the Apple OS.

    Also, I have came across many professional users who are actually using Vista on top of a Mac instead of the native Apple OS, and ALL of them are very satisfied with Vista; they find it stable and fast.

    So I think this article has a sort of a natural bias; which I understand because we demand more from Microsoft than any other company. That's the nature; because we expect a leader to deliver even more than its competitors. So, I want to see more good stuff coming from Windows 7 and I will be as many of you "frustrated" because regardless of what they deliver, I would want more!

  • Report this Comment On January 08, 2009, at 1:15 PM, TMFBent wrote:

    Vista is the best OS microsoft has ever produced for my PCs. The comparison to ME is way off base.

    The bad press is pretty amazing, but the only trouble I've had with my Vista PCs has come from Lenovo's bloatware. Cleaned upon purchase (annoying, but necessary thanks to OEM deals with symantec, adobe, google, aol and others) Vista is fast, reliable, and has great futures not present in previous versions, nor in Mac.

    Sj

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