For Microsoft, 2006 Ends on a High Note, but Challenges Remain

I spoke to a couple of analysts about what they saw as Microsoft's biggest successes and failures this past year, what the major milestones were for the year and what challenges lay ahead. This is what they had to say:

Rob Enderle, the principal analyst at the Enderle Group

Biggest success/milestones:

(1) The deal Redmond struck with Novell around interoperability and patent protection.
(2) Getting Vista released to manufacturing.

Biggest failures:

(1) The delays in getting Windows Vista out the door; missing the 2006 holiday buying season.
(2) The delays reminded hardware manufacturers just how dependent they were on Microsoft and started them talking about finding alternatives to create the same dynamic they created with AMD to correct a similar problem with Intel.
(3) Its poor image.

Biggest challenges:

(1) Improving its performance against its strongest competitors, Apple and Google.
(2) Addressing the company's long-term inability to do demand-generation marketing.
(3) Creating a stable and coordinated group in its people-facing positions, which are critical to maintaining relationships during difficult times.

Michael Cherry, lead analyst for Microsoft at Directions on Microsoft

Biggest success/milestones:

(1) Shipping of new versions of its flagship Windows and Office products
(2) Progress on some ongoing efforts, such as security, with better availability of information and an improved delivery of patches through the security response center.

Biggest failures:

(1) Microsoft's inability to clearly articulate key messages, such as the explanation of the agreement with Novell.
(2) The lack of clear explanation of what Office and Windows Live really are and which pieces constitute really new and revolutionary approaches and new services.
(3) Not being clear enough in sharing information about when products will be completed and what they will include.
(4) Marketing themes, like "People Ready," are too generic.

Biggest challenges:

(1) Some process and logistical issues have to be fixed. Calling a premature beta or release candidate a technology preview does not speed up the development process or improve the quality.
(2) The Live pieces made public so far are confusing.
(3) The services really only work with the latest version of Microsoft's browser. A company that thinks it can offer Web-based services to only those with the latest version of Internet Explorer doesn't get the whole premise of Web-based services.
(4) Having its services support all browsers currently in use.

I'd really like to hear what you think Microsoft's biggest achievements and failures were, and what challenges it faces going forward.