A Gloomy Vista for Microsoft

Last year I was meeting with the CEO of a PC company who offered to give me a demo of his company's gorgeous new top-of- the-line notebook, a machine that cost several thousand dollars and came loaded with Windows Vista, the latest version of Microsoft's operating system. He flipped open the laptop, pressed the power button, and … nothing. We waited. And waited. It was excruciating. He tried control-alt-delete. He tried holding down the power button. Finally he removed the battery and snapped it back into place. The machine started up—slowly—while the CEO sat there fuming. Speaking in a carefully measured tone, he acknowledged that he had been less than pleased with Vista, and confided that he'd visited Microsoft's headquarters in Redmond, Wash., to express this displeasure in person. I would not have wanted to be across the table from him at that meeting.

"Nobody here looks at Vista as a fiasco," says Brad Brooks, a Microsoft marketing vice president. If that's true, and nobody at Microsoft thinks Vista has been a public-relations nightmare, then the company is in trouble. Vista first shipped in January 2007, after several delays, and immediately had problems. It was sluggish. It had trouble going to sleep and waking up. It wouldn't work with some printers and accessories. Users launched a massive online petition begging Microsoft not to discontinue its old operating system, XP, which is stable, fast and, after six years of patches, pretty reliable. Many consumers like me, who'd bought new PCs loaded with Vista, reloaded them with XP.

Microsoft seems to be getting the message. Working in collaboration with its PC-maker partners, it says it has ironed out the glitches. It has embarked on a $300 million advertising blitz aimed at rehabbing Vista's reputation. But that too has gotten off to a rocky start. Microsoft teamed Jerry Seinfeld with Bill Gates in ads, and then, after two weeks, announced there would be no more Seinfeld. Microsoft says this was the plan all along. More likely, it was reacting to the fact that the quirky ads made no sense. Also, hiring a TV star from the 1990s only added to the impression that Microsoft is stuck in a time warp, at a time when Apple is seen as the king of cool and is gaining market share.

It's important to point out that the struggle to get Vista on its feet hasn't hurt Microsoft financially. In fact, Windows revenue grew 13 percent to $17 billion last fiscal year (a record year for Microsoft), even after the company cut prices on Vista to spur demand. Microsoft says it has sold more than 180 million copies of Vista, which is in line with the adoption rate of Windows XP, and Brooks says 89 percent of users surveyed claim to be satisfied or very satisfied. To drive home that point, Microsoft has launched ads around what it calls the "Mojave experiment," where it grabs people who hold a low opinion of Vista and shows them a new operating system called "Mojave." When the subjects rave about Mojave, Microsoft springs the trick: it's actually Vista.

Yet the fact that Microsoft has to run ads like that speaks to the kind of perception problems Vista has had. Why advertise at all, when almost everyone who buys a PC today will get Vista on it, whether they like it or not? For one thing, big corporations—Microsoft's bread and butter—have been slow to migrate from XP to Vista and need to be convinced that it's now safe to make the move. It's the same with smaller customers like Mouli Ramani, vice president of business development at Lilliputian Systems, a tech company in Wilmington, Mass. He's sticking with XP because he knows it won't conk out on him. "I'm not willing to risk my career on Vista," he says.

Meanwhile, Apple's Mac computers, which run Apple's OS X operating system instead of Windows, have been gaining share, reaching 11 percent of the U.S. consumer market, according to researcher NPD. That's a small slice compared with Microsoft, whose software runs on 90 percent of the world's PCs. But Apple users tend to be the kind of people marketers refer to as "influencers" or "tech elites," the in-the-know folks who adopt the coolest new technology and set trends. Apple's highly effective "I'm a Mac" ads have done a great job of positioning Apple as the machine for hipsters, and Windows-based PCs as the choice for dorks. Remember how AOL used to be cool, but then became the service used only by people who didn't know any better? Microsoft is heading down that path. "You fly business class today, and it's nothing but Macs," says one former Microsoft executive, who's now carrying a Mac himself, albeit with Vista loaded on it.

Yet another challenge for Microsoft comes from PC makers themselves, who are sending mixed messages about Vista. HP insists it is committed to Vista, but also touts the fact that its engineers have created little Linux-based software modules so that HP customers can perform basic tasks, like checking e-mail and playing DVDs, without booting Vista at all. HP calls this "innovating on top of Vista," though "sidestepping" might be a more accurate description. At Lenovo, a team of engineers has been working with Microsoft for the past year to improve Vista. And Lenovo loads Vista on machines it sells to customers. For its own use, however, Lenovo still runs Windows XP as its corporate standard. Make of that what you will.

© 2008