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Microsoft's To-Do List

Happy New Year, Microsoft. Now, get to work! That's the holiday message from research firm Directions on Microsoft to the world's largest software vendor.

The research firm, many of whose analysts are former Microsoft product managers, took the software vendor to task with a list of the top ten challenges the company needs to meet in 2006.

Job No. 1: Get Vista into the boardroom. Directions on Microsoft said that while Vista's cool graphical effects might impress consumers, they could turn off more IT admins than they attract. Meanwhile, sales of Software Assurance prepaid upgrade agreements were disappointing.

"The Windows Client division has to tell corporate customers why they want Windows Vista, and why they shouldn't wait until they buy new hardware," wrote Rob Helm, director of research.

Then there's job No. 2, something that Microsoft can't seem to cross off its to-do list: Application security and reliability.

"Microsoft has always offered guidelines for how to develop secure, reliable applications on Windows, but the company rarely had the discipline to enforce them, even with its own applications," the analysts wrote.

Ouch!

Microsoft should publish a definitive set of guidelines for software developers, they said, and enforce those guidelines internally -- even against its own developers.

Third, the company should lay its cards on the table about its plans for its "managed solutions" hosted software initiative, so that systems integrator partners, some of whom move thousands of units of Windows, Office and server products, know how much business Redmond will leave on the table for them.

"Microsoft needs to map out where its managed solutions effort is going, how it will differ from what partners are doing today, and how it will kick-start financial growth," wrote Directions analyst Paul DeGroot.

Next, Redmond better get cracking on developer tools for Windows Vista. Directions on Microsoft gave the company high marks for its developer tools and support programs, but noted that time is short to produce the next generation of basic tools to support some of the new functionality of Vista, expected to ship in the second half of 2006, such as the Web services framework.

Fifth, the analysts said Microsoft's online strategy needs still another extreme makeover.

"Microsoft’s latest online strategy is to match Google’s every move in hopes of raking in more advertising dollars, while taking yet another stab at subscription services. 2005 saw a lot of motion -- leaked memos, blog buzz, reorgs, and a new 'Live' brand -- but little progress in terms of service improvements, audience share, or dollars," wrote analyst Matt Rosoff.

But wait, there's more.

Microsoft's business solutions line of business has been renamed Dynamics, but it's still disorganized. Whoever replaces current division leader Doug Burgum will have to map out how the product line will come together into something consistent for partners to support and sell, and detail how existing customers will transition to the new world.

No. 7 on the to-do list is to turn Microsoft's Dynamic Systems Initiative (DSI) for managing software from vision to reality, the analysts said.

"The Dynamic Systems Initiative could significantly improve the availability of critical systems and establish a new standard for software that is built from the ground up to be monitored and managed efficiently," wrote analyst Peter Pawlak. This is potentially one of Microsoft’s strongest competitive assets: no other vendor (nor the open source community) has such a broad range of software under one roof, and thus the ability to design it to work together."

But so far, he added, critical pieces of DSI are still "vaporware," as are the tools corporate developers will need to produce manageable applications.

Next, if it's too much to ask the company to lay out product roadmaps, the analysts said, in 2006 it should at least clarify its policies. For example, the company could state whether the Windows client operating system will be consistently released with alternating major and minor releases, as was proposed for Windows Server.

"Too often," wrote analyst Michael Cherry, "customers have to make critical business decisions with incomplete knowledge of when Microsoft will ship the next release, and making a mistake has major financial implications with all of the risk assumed by the customer. I'd like to see some signs of release discipline breaking out in 2006."

Then, there's the "Xbox 360 Final Death Match Challenge." Microsoft promised that the Xbox business would become profitable by fiscal year 2007, which Directions on Microsoft pointed out begins in July 2006.

While the game console has seen strong uptake from game publishers and consumers, Rosoff said, Microsoft has to come up with the "must have" game title that was missing at launch, and prove that early shortages and glitches are temporary and solvable problems.

Finally, Microsoft needs to resolve the disconnect between software assurance plans and the actual product release cycles.

DeGroot saw real progress in 2005, with better documentation, better software maintenance benefits and better use of the Web for product use rights, pricing, and other product data. But he said the current subscription model probably wouldn't take the company where it needs to go in terms of maintenance and service revenue.

And then there are the ongoing antitrust woes, such as Wednesday's ruling by the Korea Fair Trade Commission that Microsoft abused its monopoly position by bundling Windows Media Player and MSN Messenger with Windows. Oh, wait. That would make eleven challenges. Never mind.



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