Wednesday, March 22, 2006

50 Million Lines of Trouble

Microsoft Corp. announced a delay in its long-awaited Windows Vista operating system, and people familiar with the matter said the company is planning a major management shake-up in its Windows group.

The Redmond, Wash., software company said it will begin broadly selling a version of Vista for consumers in January, compared to its earlier plan of offering the product in time for the holiday selling season.

—Wall Street Journal

Well, it only lasted about a month.

I’m speaking about the 30 days or so that Microsoft was not everybody’s favorite technology whipping-boy—and it was Google’s turn to find out what happens in America when you disappoint people.

Following its fourth quarter earnings report and right up until last night’s admission by The Evil Empire that the so-called “Vista” consumer operating system would be yet-again delayed, Google had been the former whiz-kid-led outfit everybody wanted to mock.

A week or two after its earnings miss, Google’s CFO made some off-the-cuff remarks that panicked the market; then came the Analyst Day when management recanted those comments; which was followed by the accidental sales guidance release on the web site, not to mention Congressional appearances and Justice Department lawsuits.

The Google-bashing culminated in yesterday’s reaction to Google Finance, the underwhelming knock-off of Yahoo Finance: even Jim Cramer—the man who once declared National Google Day on his show and urged everybody who would listen to buy the stock a hundred and fifty points lower than the current price (and two hundred fifty points below its peak)—dismissed Google Finance on air to the hundreds of thousands of Cramericans to whom his word on Google is, rightly so, the last.

But last night Microsoft disclosed yet another delay in the already-delayed “Vista” operating system launch—and everybody can go back to making fun of Microsoft while Google catches a break.

Last night’s news probably comes as no surprise to anybody in the industry, given the fact that Vista contains 50 million lines of software code and is based on an operating system that’s about as secure as an unlocked Yugo on blocks.

Over a year ago I asked the CEO of a large software company (which had managed to flourish in Microsoft’s shadow despite being viewed as eventual road-kill) about the impact “Vista” would have on his company’s business.

At the time, “Vista”—then known as “Longhorn” for whatever reason—was expected to be the Swiss Army Knife operating system that would finally make his company’s product obsolete.

“It’s not the same Microsoft,” he told me. “They have so much on their plate just trying to deal with virus attacks on their core operating system, it’s hard to get all the new features right.”

He said he still worried about Microsoft, and never counted them out. But, all the same, he felt pretty sure that “Longhorn” (or “Vista” or “Slowpoke” or whatever Microsoft wants to call it) wasn’t going to launch on time—and, when it launched, it wouldn’t run him over.

So far, he’s right.

Jeff Matthews
I Am Not Making This Up

© 2005 Jeff Matthews

The content contained in this blog represents the opinions of Mr. Matthews. Mr. Matthews also acts as an advisor and clients advised by Mr. Matthews may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Matthews' recommendations.


john lichtenstein said...

What could possibly be more secure than a Yugo on blocks?

Thanks for the headsup on Google Finance. I input the tickers for a couple of Baloney-Brigade-infested technology-from-outerspace trainwrecks I follow and Google Finance couldn't find them. For one of them it found an unrelated Chinese company with initials that are the same as the ticker. Could there be a button someplace to turn the baloney filter off?

dkman said...

My only surprise at MSFT's announcement was that anyone was surprised.

Software quality aside, MSFT has always always made product announcements and set release dates waaaay too early, in a deliberate bid to create buzz and take the wind out of the competition.

Most of you will probably remember that the ole paradigm-shifting Windows 95 was touted for years and was at least a couple of years late.

To me, the Vista brouhaha is just the way MSFT does business.

Gone to the blogs said...

I think it's brilliant on MSFT's part. The PC OEMs just had the wind taken right out of their 4Q sails (sales/sails, get it?). This will only accelerate price pressure in the bloating component supply chain for the remainder of 2006, setting up a 1Q07 selling environment characterized by lots cheap PCs with a lot of power. Sound like a good market in which to launch the consumer version of Vista? You bet it does.

BDG123 said...

Microsoft has created a self fulfilling prophecy in an attempt to limit competition by bundling. Bundling functions that aren't typically OS related has allowed Microsoft to minimize competition in many areas including security, web browsing, file management, backup/restore, communications and on and on and on. Yet, now, the product has become so feature rich and encompasses so many areas of capability that the complexity is burying Microsoft. They have difficulty in meeting deadlines consistently because there are millions of lines of code to test and integrate.

Life on the farm will not get any easier. Now, if Microsoft's OS were object oriented, per se, it would be alot easier to snap in and out parts as opposed to the conglomeration of gook they've got to deal with now.

I guess the moral of the story is there is never a free lunch.