Gates Sees Synergy In Vista And Office Releases

Microsoft emissaries from Bill Gates to 1,000 of the company's rank-and-file programmers descended on Los Angeles last week to promote what they call the most compelling version of Windows in 10 years. In a twist, Microsoft says many companies won't even need the latest hardware to get some of Windows Vista's benefits. But the realities of buying business PCs mean that companies might give the sales pitch a closer look.

At its Professional Developers Conference, Microsoft previewed new Office and Web-design software it says will make it easier to do everything from programming the way documents wend their way through teams of workers to crafting eye-catching Web sites. Those capabilities depend on WinFX, a set of programming technologies inside Vista, due late next year. Shortly after that, a productivity suite code-named Office 12 is set to arrive and will include a new WinFX-dependent technology called the Windows Workflow Foundation for publishing documents and automatically generating notification E-mails to automate business chores.

The combination of functions could make the new software too good to resist, Microsoft chairman Gates said in a speech. "What we're going to see in the marketplace is two major releases that are very synergistic, and so a whole wave of corporations saying, 'Let's get these new capabilities out onto our desktops.'"

Vista could be the fastest-adopted operating system in PC history, Microsoft group VP Jim Allchin said in an interview last week. About 475 million new PCs will ship within two years of Vista's arrival, and Allchin said companies might upgrade several hundred million older machines to the operating system, which contains features that Microsoft can market to all its customer segments. "We haven't had a product that does this in 10 years," he said. To promote adoption, Microsoft will introduce a scalable way to install Vista on older machines that lack the graphics chips and 512 Mbytes of memory needed to run Vista's slick Aeroglass desktop. "Even if you don't have the power for the richest user experience," he said, "there's plenty in there that doesn't require new hardware."

But a mass wave of upgrades to Vista on aging PCs is probably unrealistic. CIOs should make sure a PC or notebook has at least two years of life in it before going with Vista. Otherwise, the labor and licensing costs aren't worth it, says Michael Silver, an analyst at market-research company Gartner. And since it will take large companies about 18 months of application testing, PCs bought today won't be ideal platforms for the operating system. "The best candidates for upgrades will be the machines [companies] buy after Vista ships," Silver says.

Microsoft is counting on upgrades to Vista and Office 12 to boost slowing growth. Together, Windows and Office accounted for more than $33 billion of Microsoft's $39.8 billion in revenue last year. The products also brought in more than $17 billion in operating profit.

As incentives to upgrade, Microsoft last week said that a year from now, it will release $100 million in marketing funds for software vendors that write apps for Vista. It also added new benefits to its Software Assurance licensing program that companies must enroll in to get discounts on new versions of Microsoft products. Starting in March, most Software Assurance customers will get up to 10 days of consulting from Microsoft techs or certified systems integrators for Windows and Office upgrades, and smaller companies will receive one-day workshops. But Microsoft also said that only customers that buy Software Assurance will be eligible for an upgrade to a premium enterprise version of Vista.