A Gloomy Vista for Microsoft

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A Gloomy Vista for Microsoft

Hiring a TV star from the 1990s to fix Vista's reputation only adds

to the impression that Microsoft is in a time warp.

Published Sep 20, 2008

From the magazine issue dated Sep 29, 2008

Last year I was meeting with the CEO of a PC company who offered to

give me a demo of his company's gorgeous new top-of- the-line

notebook, a machine that cost several thousand dollars and came

loaded with Windows Vista, the latest version of Microsoft's

operating system. He flipped open the laptop, pressed the power

button, and … nothing. We waited. And waited. It was excruciating. He

tried control-alt-delete. He tried holding down the power button.

Finally he removed the battery and snapped it back into place. The

machine started up—slowly—while the CEO sat there fuming. Speaking in

a carefully measured tone, he acknowledged that he had been less than

pleased with Vista, and confided that he'd visited Microsoft's

headquarters in Redmond, Wash., to express this displeasure in

person. I would not have wanted to be across the table from him at

that meeting.

" Nobody here looks at Vista as a fiasco, " says Brad , a

Microsoft marketing vice president. If that's true, and nobody at

Microsoft thinks Vista has been a public-relations nightmare, then

the company is in trouble. Vista first shipped in January 2007, after

several delays, and immediately had problems. It was sluggish. It had

trouble going to sleep and waking up. It wouldn't work with some

printers and accessories. Users launched a massive online petition

begging Microsoft not to discontinue its old operating system, XP,

which is stable, fast and, after six years of patches, pretty

reliable. Many consumers like me, who'd bought new PCs loaded with

Vista, reloaded them with XP.

Microsoft seems to be getting the message. Working in collaboration

with its PC-maker partners, it says it has ironed out the glitches.

It has embarked on a $300 million advertising blitz aimed at

rehabbing Vista's reputation. But that too has gotten off to a rocky

start. Microsoft teamed Jerry Seinfeld with Bill Gates in ads, and

then, after two weeks, announced there would be no more Seinfeld.

Microsoft says this was the plan all along. More likely, it was

reacting to the fact that the quirky ads made no sense. Also, hiring

a TV star from the 1990s only added to the impression that Microsoft

is stuck in a time warp, at a time when Apple is seen as the king of

cool and is gaining market share.

It's important to point out that the struggle to get Vista on its

feet hasn't hurt Microsoft financially. In fact, Windows revenue grew

13 percent to $17 billion last fiscal year (a record year for

Microsoft), even after the company cut prices on Vista to spur

demand. Microsoft says it has sold more than 180 million copies of

Vista, which is in line with the adoption rate of Windows XP, and

says 89 percent of users surveyed claim to be satisfied or

very satisfied. To drive home that point, Microsoft has launched ads

around what it calls the " Mojave experiment, " where it grabs people

who hold a low opinion of Vista and shows them a new operating system

called " Mojave. " When the subjects rave about Mojave, Microsoft

springs the trick: it's actually Vista.

Yet the fact that Microsoft has to run ads like that speaks to the

kind of perception problems Vista has had. Why advertise at all, when

almost everyone who buys a PC today will get Vista on it, whether

they like it or not? For one thing, big corporations—Microsoft's

bread and butter—have been slow to migrate from XP to Vista and need

to be convinced that it's now safe to make the move. It's the same

with smaller customers like Mouli Ramani, vice president of business

development at Lilliputian Systems, a tech company in Wilmington,

Mass. He's sticking with XP because he knows it won't conk out on

him. " I'm not willing to risk my career on Vista, " he says.

Meanwhile, Apple's Mac computers, which run Apple's OS X operating

system instead of Windows, have been gaining share, reaching 11

percent of the U.S. consumer market, according to researcher NPD.

That's a small slice compared with Microsoft, whose software runs on

90 percent of the world's PCs. But Apple users tend to be the kind of

people marketers refer to as " influencers " or " tech elites, " the in-

the-know folks who adopt the coolest new technology and set trends.

Apple's highly effective " I'm a Mac " ads have done a great job of

positioning Apple as the machine for hipsters, and Windows-based PCs

as the choice for dorks. Remember how AOL used to be cool, but then

became the service used only by people who didn't know any better?

Microsoft is heading down that path. " You fly business class today,

and it's nothing but Macs, " says one former Microsoft executive,

who's now carrying a Mac himself, albeit with Vista loaded on it.

Yet another challenge for Microsoft comes from PC makers themselves,

who are sending mixed messages about Vista. HP insists it is

committed to Vista, but also touts the fact that its engineers have

created little Linux-based software modules so that HP customers can

perform basic tasks, like checking e-mail and playing DVDs, without

booting Vista at all. HP calls this " innovating on top of Vista, "

though " sidestepping " might be a more accurate description. At

Lenovo, a team of engineers has been working with Microsoft for the

past year to improve Vista. And Lenovo loads Vista on machines it

sells to customers. For its own use, however, Lenovo still runs

Windows XP as its corporate standard. Make of that what you will.

© 2008