April 4th, 2008

Vista fiasco continues with retreat to XP

Posted by Robin Harris @ 6:25 am

Categories: Marketing, Software

Tags: Microsoft Windows XP, Microsoft Windows Vista, Microsoft Corp., Vista Fiasco, Linux, Microsoft Windows Vista (Longhorn), Microsoft Windows, Operating Systems, Software, Robin Harris

Fall back! Fall back!
Microsoft’s announcement yesterday of the “Extended Availability of Windows XP Home for ULCPCs” is more evidence that the Windows Vista fiasco is still growing.

Microsoft is scrambling to stay relevant in a world where they are no longer the only game in town. Can’t let Linux become the default OS for low-cost systems, can we?

Why doesn’t software get cheaper?
My 1978 Apple II cost over $3,000 in today’s dollars - with no disk or display - and a primitive command line OS. Today a vastly more powerful machine like the Eee is less than $400 - with a display and an incredibly capacious 4 GB flash drive. Other machines coming soon will be much cheaper. $200 is the magic number for broad consumer acceptance.

Microsoft has lived in a monopoly pricing bubble, selling Windows to OEMs for $50 a copy, while hardware - driven by Moore’s Law - has plummeted in price. That couldn’t last forever. It’s crunch time for Redmond.

Redmond’s nightmare now in the light of day
Microsoft’s announcement created a new market segment - the Ultra Low Cost PC - that it hopes will protect its Vista margins from the low-end Linux attack. Like that could work.

Today’s mid-range Vista PC is tomorrow’s ULCPC. The reasons vendors and customers balk at Microsoft’s $50 Vista tax today won’t change. Consumers will pay $50 on a $600 machine. But $50 on a $200 machine? No way.

People are realizing that for much of what they do - web surfing, email, online video - can be handled by much smaller and cheaper systems. As Linux continue to refine the GUI and simplify its distros, the Windows advantage continues to fade.

The Storage Bits take
First time users who learn Linux will have no reason to ever pay for Windows. Just as I deciphered the Apple II’s CLI 30 years ago, today’s eager, but poor, first timers will figure Linux out.

Microsoft’s Vista is a slow-motion disaster. Bloated and inflexible, expensive and late, Vista is a continuing drag on Microsoft’s business flexibility.

But this isn’t all Jim Allchin’s fault. If Steve Ballmer were as smart as he thinks he is he’d have seen the ULCPC segment emerging and positioned to company to dominate it. Instead they’re playing catchup with a 7 year old product.

Steve, resign. If you can’t do that, at least stop obsessing over Google. Focus Microsoft on building great software. That is a game you can win.

Comments welcome, of course. BTW, there’s an opening at Microsoft for an ULCPC Business Development Manager. Just make sure you aren’t measured on margins. That could be brutal.