Microsoft Works to Perfect Windows Vista

An advertising blitz intended to help Microsoft polish the tarnished brand of its Windows Vista operating system began this week with a head-scratcher of a commercial.

The ad features Jerry Seinfeld flexing some new shoes, Bill Gates adjusting his shorts and no mention of Vista. Microsoft says the ad is meant to get people talking, and that other parts of the marketing campaign will actually get into what its software can do.

But the advertising, which will cost hundreds of millions of dollars over several years, is really just “air cover,” according to Bill Veghte, the Microsoft executive who is responsible for sustaining Windows, probably the most lucrative franchise in history.

For more than a year, Mr. Veghte and his team have been developing ways to transform the experience of buying and using personal computers that run Microsoft software.

Corps of Microsoft engineers, for example, have been dispatched to tweak hardware and software to make Vista PCs faster and less crash-prone. Microsoft has stepped into the world of PC retailers in a way it never has before, offering training and advice — and even paying to put hundreds of “Windows gurus” in stores.

By now, Microsoft insists that most of the frustrating technical problems with Vista, which was introduced in January 2007 after repeated delays, have been resolved — and many industry executives and analysts agree.

Yet Vista’s image problems have opened the door to alternatives to Windows as never before. Windows still commands more than 90 percent of the market for personal computer operating systems. But Apple’s Macintosh operating software — which runs only on Apple machines — is gaining ground, especially in the United States.

Microsoft’s stumbles have also given momentum to the shift of software away from the PC and onto the Web. Web-based programs for e-mail, spreadsheets and other tasks can be run in a browser, undermining the value of the underlying operating system. Indeed, Google’s entry into the browser market this week is an implicit declaration that the browser is increasingly supplanting the PC operating system as a strategic computing gateway.

Microsoft makes much of its living from Windows, and a very good living it is. In the year ended in June, Microsoft’s Windows group generated revenue of nearly $16.9 billion and operating profits of more than $13 billion, a phenomenal 77 percent margin.

To keep that business humming, Microsoft needs to have consumers and corporations upgrade to new versions of Windows — something that has not been so easy with Vista.

“What we’re seeing with Vista is that for the first time some significant portion of consumers and business customers have decided it’s not worth upgrading,” said David B. Yoffie, a professor at the Harvard Business School. “If they don’t, the end of the franchise is at hand.”

The main problem with Vista, Microsoft said, was that given the delays, uncertainty and significant changes in the software, the rest of the industry was not ready when Vista finally arrived. There are one billion worldwide users of the various versions of Windows. Hundred of thousands of hardware devices and software applications run on it, and they need connecting programs, called drivers, to work smoothly with it.

Vista represented a big shift from its predecessor, XP, so it required a lot of new drivers — and Microsoft did a poor job of communicating how much work was needed. Often, Microsoft said, an older driver still worked with Vista, but it slowed down the PC or made it crash unpredictably. Today, 77,000 hardware devices and components are compatible with Vista, more than twice the number when Vista was introduced.

“We are in a very different position with Vista than we were even six months ago,” said Mr. Veghte, senior vice president for Windows strategy and marketing. “And there are a lot of people holding forth with criticism of Windows Vista that have not used Vista, or not recently.”

Just after Vista shipped, Steven A. Ballmer, Microsoft’s chief executive, tapped Mr. Veghte, 41, to move to the Windows business. In his 18 years at Microsoft, Mr. Veghte has had a wide-ranging career in sales, marketing and software development (he holds two patents).

Vista’s troubles were seen within Microsoft’s management ranks, characteristically, as an opportunity. Mike Nash, who had worked with Mr. Veghte before, signed up to join him. “There was so much we could do better,” said Mr. Nash, who is vice president for Windows product management. “Our task was to shake things around and make the Windows business much more sustainable over the years.”

From : http://www.nytimes.com/

Microsoft quietly offering ad-funded Works

After years of exploring the matter, Microsoft has finally started offering an ad-funded version of Microsoft Works in some countries.

Users who run the software see a small ad as they are writing their document or editing their spreadsheet. Although the program has the ability to update its set of ads online, today it runs mostly ads for Microsoft and a few partners, all of which ship with the product itself.

Works SE (which stands for Sponsored Edition) is free to PC makers, though they don't get a cut of the ad revenue. Large computer makers typically only pay a buck or two for the low-end version of Works, though.

The ad-funded Works falls into a category of several products the company is exploring, rather than a significant new source of revenue, said Microsoft Vice President Chris Capossela.

"This is a trial," he said. "This is a pilot. This is a 'Can we build software that will do this?' "

Microsoft has been considering such a product for some time, with many inside the company arguing that Microsoft could make significantly more money for Works by selling advertising than it gets in revenue from computer makers for the product.

Capossela said the early response to the free product has been positive. "People have liked the price," he said with a laugh, adding that it has also not been perceived as that intrusive, something Microsoft had worried about.

Last August, Microsoft said that it would start piloting Works SE, but the company gave few details on where or how the product would be offered.

Microsoft remains cagey on the details of where you can find Works SE. The company has been testing Works SE in 5 countries: The United States, France, Canada, Poland and the United Kingdom. It is available only through select computer makers and Microsoft won't say which computer makers those are.

According to its Web site, Packard Bell offers the software on some of its models in the United Kingdom. Using the same sleuthing technique (a search engine), it appears Sony is one of those offering it in the U.S.

Capossela put Works SE in the same category as several other new approaches, including the Albany subscription service that Microsoft detailed this week. Also in that camp would be the prepaid Office cards that Microsoft has been selling in some countries for more than a year now.

Response to that last product, which sells Office in six-month increments for around $20, has been mixed. The cards were a hit in South Africa, but bombed in Mexico.

None of these areas are significant new channels as yet.

"There's no business here yet," he said. "These are all experiments."

The one area where Capossela said Microsoft has seen significant sales is the download and purchase of Office over the Web. Customers either download a trial version of Office directly from Microsoft or get it with a new PC. After 60 days of use, they are prompted to buy a full version from Microsoft or a partner (partners typically sell the product cheaper than Microsoft).

Microsoft was not quick to seize on selling directly over the Web, Capossela said.

"We're late," he said. "If you look at Symantec and Intuit, they have huge businesses here."

Capossela also stressed that Microsoft is focusing its efforts on new ways of selling Office and creating online products that complement Office, not replicating the suite on the Web. He said that Microsoft still doesn't see much competition from Google Apps.

"We haven't seen them yet," he said. "We've seen a love affair in the press. We haven't seen customers embracing Google Apps."

As for Albany, Capossela said the main idea is to try and have a product that can be pitched by the Geek Squads of the world when people buy a new PC at retail. Tech benches, as these services are known generically, have become an important avenue for consumer software sales.

"This is designed for a certain sales motion and if that sales motion didn't exist, this product probably wouldn't exist," he said.

That said, Microsoft has yet to sell the product to those retailers or determine how much it will charge for the subscription product, which combines Office 2007 Home and Student Edition, Windows Live OneCare security, and other free Windows Live services.

Have you seen the ad-based Works on a PC? If so, drop me a note at ina dot fried at CNET dot com and let me know which model.

Form : http://www.news.com/