Assessing Windows Vista On Its First Anniversary

"The 'Wow' Starts Now," Microsoft proclaimed when it officially launched Windows Vista a year ago. But looking back from Vista's first birthday, while Microsoft claims Vista is a major reason for its best revenue ever, it's been a year when Vista, far from scoring a quick knock-out, seemed to take more punches than it landed in the early rounds. If there is any good news for Microsoft it is that with experience -- and adjustments -- Vista has finally begun to accumulate points on the cards of both enterprise and consumer judges.

Vista's first year was not an entirely smooth one, to say the least. Early on, even while it was winning the respect of the security community for at least improving on previous versions of Windows, it met with some very public rejections from large organizations like the Department of Transportation, where CIO Daniel Mintz placed "an indefinite moratorium" on upgrades to Vista, citing "no compelling technical or business case for upgrading." Similar pronouncements came from enterprises that were worried about Vista's incompatibility with their existing applications, or the high hardware costs imposed by the new operating system.

At the same time, consumers were finding that what made Vista more secure also made it more annoying. User Account Control's barrage of dialog boxes led many users to simply turn off some of what made the OS more secure. And they found other problems, like one-shot product activation and, later in the year, malfunctions in the Windows Genuine Advantage anti-piracy code that shut down legitimate copies of the OS.

Both companies and consumers struggled with Vista's lack of support for custom applications and current versions of widely used programs, the lack of Vista-compatible drivers for hardware devices, and the operating system's heavy hardware requirements, particularly when it came to graphics.

The net result, at the end of Vista Year One, seems to be that consumers buying news PCs are taking home Vista because it's installed, but not rushing to upgrade, and the enterprise market has been slow to show much interest.

Microsoft, for its part, has been relentlessly upbeat about Vista. Throughout the year it issued glowing reports of Vista sales, backed up by strong financial results. Its latest quarterly report, for the period ending in December, shows an 81% increase in earnings on a 30% increase in revenue over the same period in 2006, an improvement it linked directly to Vista sales -- which have exceeded 100 million copies, Bill Gates said in his keynote speech at the Consumer Electronics Show in Las Vegas a month ago.

"We're pleased," said Neil Charney, a product manager in Microsoft's Windows Client group who was made available for an interview in response to a request to the company. What he was pleased about was the 100 million number, but, he said, "we're also pleased with the results of some of the investments we made." He cited Vista's security in particular and named features including Windows Defender, parental controls, and User Account Control. "It's a more secure operating system than we've ever released before. There's a level of support for security in Vista that's something entirely new -- for things that many users won't ever see."

Charney also named as successful investments several usage scenarios -- what Microsoft has taken to calling "customer experiences" -- that Microsoft intends for the new operating system, including sharing photos and home media networking.

The Slow Pace Of Upgrades To Vista
As evidence of Vista's success, in addition to those 100 million sales, Charney cited CDW's third annual Vista tracking poll. The IT services company concludes that 48% of corporate IT departments in the U.S. are using or evaluating Vista. This number is up from 29% a year ago, which is good news for Microsoft. But that still means half of enterprise users are sitting tight, and indicates a slow rate of adoption for the OS. As InformationWeek reporter Paul McDougall calculated recently, Vista hasn't made the same inroads in the marketplace as Windows XP did in its first year.

The consumer market seems to be taking its time in deciding about Vista, as well: Microsoft's figures for sales growth are about 2% higher than the growth in PC sales during the past year, which increased about 11%. It appears that when new PCs come with Vista installed, consumers are accepting it, but there's no substantial movement to upgrade existing PCs.

Are both businesses and consumers shying away from Vista? "It's certainly been adopted by enterprises fairly slowly, and I hear normal, everyday consumers that don't know that much about technology say they're wary about moving to it, which is odd," said Gartner analyst Michael Silver, responding to e-mailed questions.

When asked about Vista's pluses and minuses, Charney and Silver respond by talking about Windows XP, but in different ways.

Silver responded not with specifics, but with a comparison: "Really, the biggest issue is that Vista is not 'better enough' than XP in visible ways, and there are always pains in any migration," he said. "Windows XP was so much better than what came before it (Win98 and ME for consumers), that the pain was worth the benefit and quickly forgotten. When the benefit is harder to see, the pain becomes an issue."

When asked what had been the positives and negatives of Vista's first year, Charney spoke first about the extension of Windows XP's life span as having been "pushed back out to normal. We'd shortened it when Vista came out and we extended it [from Jan. 31 to June 30 of this year]. "We want customers to move when they're ready. We've recognized that it takes time to make this move."

A slower-than-expected pace of corporate adoption doesn't surprise Silver, who predicted before Vista shipped that the enterprise market would take 18 months to begin to move to Vista. He said, "In the enterprise, you'd really need to compare Vista with Windows 2000, the last major release there (Windows XP was a minor release and easier to adopt). I don't think Win2000 got the negative reputation Vista has now, but it also took enterprises a good 12 to 18 months of planning and testing until they really started moving."

Compatibility Remains An Issue
The biggest issues with Vista have been application compatibility and general stability, and, Michael Silver noted, "Microsoft has gotten quite good at sending down updates each month to address these items. Of course, it's still hard to replace a stable and compatible platform with one that is even a little less so."

There are a couple of issues at work here, he said: "First, Microsoft made some conscious decisions to sacrifice some compatibility for security improvements and in many cases, those were probably the right decisions because they really needed to get security right. And second, Microsoft did a lot to maintain compatibility, but inevitably they had to break something. The number of legacy applications continues to grow and there's no way they can support everything. With the huge installed base, it's next to impossible to make sure everything works."

Enterprise customers have complained that Vista is incompatible with custom applications and software like terminal emulators. Consumers have found that Vista broke widely used utility applications such as iTunes and Adobe Reader, and the cost of upgrading to Vista also included an outlay for new versions of some applications like Adobe Photoshop.

Historically, Microsoft has done an exceptional job of keeping new versions of Windows backward-compatible with older applications, which has made Vista's compatibility issues even more visible. The biggest cause of compatibility issues appears to be new security features like User Account Control, which tightens up administrator control of the PC, something older software was sometimes casual about.

Microsoft remains committed to User Account Control despite negative reactions from reviewers and users, at least on the evidence of the first service pack for the OS. The beta versions of Vista SP 1, which is due in the first quarter, have made only minor changes -- so far just two fixes address UAC, and the one most likely to be noticed reduces the number of UAC prompts from four to one when you create or rename a folder at a protected location.

Microsoft has warned that SP 1 won't make a major improvement in Vista's compatibility with existing applications: Said Charney, "We've tried to set expectations for folks."

Who's In Charge Here?
The service pack, in fact, may be more of a check off item for potential corporate customers than anything else, given the effective use Microsoft has made of Windows Update. "The milestones are different from previous experiences," was the way Charney put it -- Microsoftspeak for the idea that Windows Update has been a game-changer in terms of distributing fixes and updates. Charney spoke glowingly of Windows Update, calling it "one of the unsung heroes of the process, working silently in the background to deliver updates. . . . When it's working you don't even notice -- you go up and get a driver, or updates come down automatically."

Windows Update's "it just works" functionality had a darker side, however. More than a few Vista users felt it reduced their control over their PCs. Their numbers grew when users who thought they had turned off automatic update were mystified by inexplicable reboots, which turned out to be caused by forced updates to the Windows Update process itself.

Worse were problems with its activation and validation processes. With Vista, Microsoft upped the ante in its anti-piracy campaign, including "phone home" functionality that cripples Vista installations that aren't properly activated before a time-out period, or that fail recurring validation tests. Failure means that the system gives the user a three-day grace period and then goes into "reduced functionality mode" -- features like the Aero interface stop working, and eventually the OS will boot up for only an hour at a time.

After a couple of embarrassing failures in the systems that managed those validation checks, Microsoft decided in December to adjust "the customer experience that differentiates genuine from non-genuine systems in Windows Vista and later in Windows Server," said a company VP. That's Microsoftspeak for removing the "kill switch:" SP1 will include a fix that disables the Vista functionality that disables features and limits the operating time of Vista installations that Microsoft's servers judge to be pirated software. After the fix is applied, activation and validation will continue to function, but Vista installations judged to be pirated will continue to function, warning users with hourly nag screens.

The change seems to represent a half-step back from the hard line Microsoft took with the launch of Vista, when initiatives like mandatory activation and perpetual validation clearly signaled to users a loss of control over the operating systems of their PCs. There are other signs, as well. Microsoft antagonized Vista users with pronouncements on the number of times a copy of Vista could be reinstalled and reactivated, and restrictions on which versions of Vista could be run in virtual-machine environments. The company recently relaxed the prohibition against virtualizing the two low-end versions of Vista, Home Basic and Home Premium.

What Comes Next?
The number of editions of Vista represented another experiment by Microsoft, which launched five versions of the operating system -- Home Basic, Home Premium, Business, Enterprise, and Ultimate. The result, combined with the "Wow" advertising campaign, created confusion in the marketplace over which versions contained features like Aero, Windows Media Center, and BitLocker encryption. The "Wow" campaign didn't last long, and the differentiation among Vista versions was made even muddier by the continuing strong sales of Windows XP Home and Professional editions. A renewed marketing campaign for Vista likely requires a simpler story to tell, and the changes allowing virtualization in the End User Licensing Agreements of the various versions may point to a streamlining of the number of Vista offerings, possibly as soon as SP1 is released.

The move will allow Microsoft to do three things: market Vista to consumers with an understandable benefits message, ratchet up its efforts to convince businesses to adopt Vista, and differentiate Vista from yet another version of Windows that's clogging the sales channel -- the forthcoming Windows 7.

For consumers, that means an increasing focus on what Neil Charney called "the Windows Vista home" and Vista as a platform that partners can take advantage of. "The platform story is the interesting story for me," he said.

While Vista-specific applications have been notable in their absence to date, Charney predicted a future where "Vista capabilities become core functionality over time, the way wireless local-area networking did after it was introduced in Windows XP." He cited DX10 graphics for gaming and Vista's media networking capabilities as two examples, and said innovation in Vista-driven applications will come as a result of integration with Windows Live services delivered across the Web.

The enterprise market already has shown some signs of waiting for Windows 7 -- the follow-on to Vista already is announced for delivery in 2010, and anticipated perhaps as early as 2009. The CDW poll results show the glass half empty for Microsoft, with half of all the respondents not planning to upgrade to Vista.

Passing on Vista upgrades in favor of whatever comes next may not be a viable strategy, however, said Michael Silver: "Organizations that tried to skip Windows XP have found that the chasm between versions is too far to jump, so some moved to Vista and others ended up having to deploy XP after all.

"Skipping releases entirely is always risky because you never know when the next version of Windows will ship and how soon you can migrate to it (and Microsoft doesn't know, either),' Silver sais. "Our general advice is to bring in new PCs on Vista at some point (for many that will be 2009) and just leave the old ones on XP till they are replaced."

The CDW poll also points to a softening of enterprise IT negative attitudes toward Vista. Familiarity, it seems, has bred content: IT departments are happier with Vista's features, particularly in the area of security, and less concerned about the hardware costs of Vista than they were a year ago.

Another year will bring further declines in the relative cost of PC hardware -- and make a lot of corporate desktop hardware look even more antique. Only a major economic downturn would be likely to derail current estimates of another strong year for PC sales, so even if Vista remains tied to hardware sales it would do well, and corporate upgrades could finally kick in as old hardware is upgraded. This has been a year when Vista has had its rough edges knocked off, and the marketplace has adjusted its expectations. By Vista's next birthday it should be more differentiated and acceptable for both its consumer and business marketplaces.