Microsoft's Quiet Success Story: Windows 7

These days I almost feel bad for the guys at Microsoft. They've got what anyone in the world would consider a hit product on their hands, and guess what? Nobody cares. Everybody is so busy gushing over Apple's iPad—myself included—that they are not paying any attention to what's going on in the land of Windows.

To wit: Windows 7, the latest version of Microsoft's operating system, is the hottest-selling product in the company's 35-year history. In five months Microsoft has sold 90 million copies. That's twice the rate of Microsoft's last operating system, Windows Vista. "Windows 7 is on a tear right now," says Brad Brooks, vice president of Windows consumer marketing. "The consumer PC segment has exploded since Windows 7 shipped." The growth rate for the consumer PC segment is now 20 percent, versus 6 percent before Windows 7 shipped—likely because a lot of customers were sitting on the sidelines, waiting for Windows 7 before they bought a new PC.

While Vista got blasted for being slow and bloated and glitchy, by most accounts Windows 7 is pretty high-quality stuff. Microsoft claims that in its own surveys, Windows 7 has received the highest customer-satisfaction scores of any product in its history. That may be because Microsoft ran a huge beta test, utilizing more than 8 million users who helped Microsoft find and wipe out bugs. I've been running Windows 7 for more than a year, and it's been very solid. To be sure, I still use Macs as my primary machines, but these days that's mostly out of habit.

Another reason Windows 7 seems so good is that Vista was such a disaster. The joke in Silicon Valley was that all Microsoft had to do to market Windows 7 was give it the slogan "Windows 7: It's not Vista." Vista had such a bad rap that many big companies refused to adopt it. Instead they hunkered down and hung on to Windows XP and waited for whatever came next. That was fine, since Windows XP was a solid performer. But XP was introduced in 2001 and now has grown long in the tooth. "Corporate customers realize they've got all the mileage out of Windows XP that they can hope to get," says Al Gillen, analyst with market researcher IDC, which projects Microsoft will ship 135 million copies of Windows 7 in 2010, on top of 27.5 million units in the last few months of 2009.

Perhaps for the first time ever, Microsoft is actually putting some energy into trying to promote its operating system. In the good old days they could just roll out a new operating system and then sit back and count the money. Now "we're really marketing it," Brooks says. "We hadn't done that for several years, but we're really pushing demand out there."

Windows is also getting a boost from some of the cool new computers that hardware makers are releasing, including super-light laptops and desktops with touch-screen displays. My favorite is the Sony Vaio X, a tiny notebook that weighs only a pound and a half. That's about the same as the Apple iPad and about half of Apple's three-pound MacBook Air.

This all sounds great for Microsoft. Its new flagship product is selling well. Its partners are creating interesting, unique, compelling new technologies. Revenues in the December quarter hit a record $19 billion. So why does nobody seem to care?

It may be that as the computer market has grown more mature, it has developed what consultants Al and Laura Riese call the "mushy middle." That's the huge dead zone that lies between sexy, expensive products at the high end and the low-end products that appeal to bargain hunters. In computers, Apple holds the high ground with its expensive laptops. The low end has been occupied by cheap netbooks, but now the low end is also becoming Apple territory, thanks to the iPhone and the iPad, both of which are basically small, simple computers.

Microsoft, meanwhile, sits in the middle, generating loads of money—last year's net profit was $14.6 billion—but not much in the way of excitement. That could change, of course. Maybe Project Natal, Microsoft's forthcoming system that lets you control a videogame using hand gestures and no controller, will bring the sexy back in Redmond when it ships later this year.

If not, Microsoft may just have to trudge on, raking in more than $60 billion a year and carrying 25 to 30 cents from every dollar down to the bottom line. A lot of companies would love to be that kind of boring.

Daniel Lyons is the author of Options: The Secret Life of Steve Jobs and Dog Days: A Novel.