Two Years and 1,300 Posts Later

The blog obviously preceded my tenure. I posted my first entry, "Microsoft's New Take on IT Community," on Nov. 13, 2006.

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Mary Jo Foley was long identified with Microsoft Watch, and by some folks she still is. But I was surprised to find that—5,178 posts ago—the distinction of first poster belongs to someone else: Peter Galli and first entry "Microsoft's 'Greenwich': Server or 'Service'?" Or so claims the blogging system. Mary Jo had the second post and many more from September 2002 until mid-2006.

Mary Jo went on to cover Microsoft elsewhere, and Peter now works for Microsoft. I get an odd, surreal feeling thinking about Peter's new role in context of my first Microsoft Watch post two years ago. I wrote about how Microsoft used blogs to reach out to IT organizations. I singled out Port 25, which is where Peter now blogs for Microsoft. Small world, huh?

Microsoft has changed over the last 12 months, as several business strategies initiated years ago started maturing around the same time. Some highlights since my one-year retrospective, in chronological order:

• Advertising is the future of Microsoft—or so CEO Steve Ballmer declared one year ago today. Google's continued search and advertising gains coupled with an economic crisis sure to sap ad spending blew apart that prediction. If advertising is the future of Microsoft, Steve will need a flux capacitor and a trip to the future to find it.
• Mobiles outpace desktops. On Dec. 7, 2007, I warned that Windows Vista system requirements would cause adoption problems as laptop sales soared and more people bought smaller, low-powered portables (e.g., netbooks). A year later, netbooks are hot, but Vista is not; 24.5 percent of these mini-notebooks ship with Linux.
• Google monopoly begins. In mid-December, The Federal Trade Commission approved Google's DoubleClick acquisition. I warned that the deal would be the start of a Google monopoly over search and online advertising. For those people critical of Microsoft, a Google monopoly might be worse. Microsoft as Google's adversary is a good thing.
• Software plus hardware plus services equals success. In January I lambasted Microsoft's software-plus-services strategy for being incomplete. Hardware is the missing element. If there is a Microsoft S+H+S strategy, it's Azure Platform Services, which is just now entering early testing phase.
• Two of three presidents abandon ship. Former business division pres Jeff Raikes announced his departure in early January; Stephen Elop replaced Jeff. Later, Kevin Johnson, president of the Platform & Services division, also left Microsoft. Ouch.
• Windows Server 2008 launches. Finally. In late February. But Microsoft's infrastructure centerpiece wouldn't be complete until the August and September launches of SQL Server 2008 and Hyper-V.

• Microsoft bids for Yahoo. The $44.6 billion hostile takeover attempt was nothing but trouble and would have been worse if successful. Yahoo's board refused to deal, leading Microsoft to later withdraw its bid. Meanwhile, the distraction contributed to huge gains in Google search share.
• Microsoft declares Interoperability Principles. The late February announcement pre-empted another European Union fine. While some Microsoft critics will disagree, I assert this: Microsoft did make substantial interoperability gains over the last 12 months. First benefit goes to Microsoft, still, but there are dramatic changes coming to Microsoft software and services.
• Windows Vista Service Pack 1 releases. The mid-March update was supposed to set off an avalanche of enterprise upgrades. Eight months later, Gartner says only about 10 percent of enterprises have deployed Vista.
• Live gives birth to Mesh. In late April, Microsoft unveiled the promising Live Mesh. As I repeatedly blogged: Sync is the killer app for the connected world—and Mesh promised good Sync. Microsoft has yet to fully realize the Mesh vision as a released product, but there's still plenty of promise in what's testing.
• Bill Gates semi-retires. On June 27, Microsoft's chairman and co-founder left his day-to-day role at Microsoft to focus on philanthropy. Finally, eight-and-a-half years after becoming CEO, Steve Ballmer could claim real control.
• Windows XP goes away—sort of. On June 30, Microsoft finally, officially stopped Windows XP OEM distribution. But Windows XP Home licensing continued for netbooks, and some OEMs offer XP downgrades on new Vista PCs.
• Platform division divides. Microsoft split up its Platform & Services division, when announcing Kevin Johnson's departure. The move consolidated groups responsible for Windows and services into tighter teams and more accountable management.
• Microsoft conducts the Mojave Experiment, where posted online were the reactions of people tricked into using Windows Vista. For all Mojave's early faults, recent marketing is surprisingly good. Last night, I saw a Mojave commercial that wasn't derogatory to customers and legitimately busted Vista misperceptions.
• Google shines up Chrome. In a surprise September beta bombshell, Google released its own Web browser, a precursor—along with Android—to a Google OS. But for all Google's brand awareness, Chrome adoption has had less than 1 percent browser usage share as of November. Chrome's bigger success will likely come on Android-based phones like T-Mobile G1.
• Windows: Life Without Walls. Microsoft's splashy $300 million ad campaign started off with esoteric commercials featuring Bill Gates and comedian Jerry Seinfeld, later to be replaced by "I'm a PC" ads. The commercials aren't groundbreaking, but they're something, which is better than the nothing from before.

• Stock market crashes. Sept. 29, 2008, will be remembered as one of those number days, like Oct. 29, 1929. Economic crisis came to gripe the globe in the weeks that followed the market's crash. Even Microsoft felt the sales sting, compelling its CFO to lower fiscal 2009 guidance. But there's a silver lining. The crisis brought Google down to earth. The company's stock, which traded for more than $741 a share on Nov. 6, 2007, closed at closed at $291 yesterday.
• Microsoft unveils Azure Services Platform. The cloud computing operating system debuted about three weeks ago to positive, early developer response. Azure will either make or break Microsoft—this is a transforming bet, whether or not the services platform succeeds. Azure is still a year away from really showing promise, but the foundations are promising.
• Windows 7 will succeed Vista. Reviewers are praising the Pre-Beta code released about three weeks ago. Seven is coming along fast, as early as mid-2009. But Windows is a declining franchise. I predict that Seven will be the last Windows release of worth. The operating system has become a commodity product; most people don't care about the features but what they can connectively do from the OS as an invisible foundation.
• "Dream Server" launches. Yesterday, Microsoft released Small Business Server 2008 and Essential Business Server 2008. Six months ago, the company couldn't have known the products would release during a major recession. I predict that sales of these products will disappoint, unless Microsoft offers up huge incentives or lots of financing to small and medium-size businesses.
• Microsoft hangs 10 on Windows Live Wave 3. Today, Microsoft proved true the old axiom that products are good on the third version. The new Windows Live is social networking done well, and it broadly supports other services. If this third-party support is a trend, maybe those Interoperability Principles really are in Microsoft's blood. Well, there's a retrospective topic for a year from now.

Microsoft is undergoing tremendous growth pains—many of them good—as the company moves beyond the Bill Gates era. The server launches and upcoming hosted online services launches will be transformational during the next 12 months. Windows Live Wave 3 is a must-see makeover. If Live fails to gain traction now, it will never succeed.

But the economy and uncertainty surrounding it will have the most impact on Microsoft, its customers and its partners in the coming year. I'll blog more on that topic as the new year approaches.

I want to thank loyal Microsoft Watch readers and all the prolific commenters for their contributions to the site over the last 12 and 24 months. This blog is for you, not me.

[Please send your tips or rumors to watchtips at live.com].