By STEVE LOHR and JOHN MARKOFF
Back in 1998, the federal government declared that its landmark
antitrust suit against the Microsoft Corporation was not merely a
matter of law enforcement, but a defense of innovation. The concern
was that the company was wielding its market power and its strategy of
bundling more and more features into its dominant Windows desktop
operating system to thwart competition and stifle innovation.
Eight years later, long after Microsoft lost and then settled the
antitrust case, it turns out that Windows is indeed stifling
innovation -- at Microsoft.
The company's marathon effort to come up with the a new version of its
desktop operating system, called Windows Vista, has repeatedly
stalled. Last week, in the latest setback, Microsoft conceded that
Vista would not be ready for consumers until January, missing the
holiday sales season, to the chagrin of personal computer makers and
electronics retailers -- and those computer users eager to move up
from Windows XP, a five-year-old product.
In those five years, Apple Computer has turned out four new versions
of its Macintosh operating system, beating Microsoft to market with
features that will be in Vista, like desktop search, advanced 3-D
graphics and "widgets," an array of small, single-purpose programs
like news tickers, traffic reports and weather maps.
So what's wrong with Microsoft? There is, after all, no shortage of
smart software engineers working at the corporate campus in Redmond,
Wash. The problem, it seems, is largely that Microsoft's past success
and its bundling strategy have become a weakness.
Windows runs on 330 million personal computers worldwide. Three
hundred PC manufacturers around the world install Windows on their
machines; thousands of devices like printers, scanners and music
players plug into Windows computers; and tens of thousands of
third-party software applications run on Windows. And a crucial reason
Microsoft holds more than 90 percent of the PC operating system market
is that the company strains to make sure software and hardware that
ran on previous versions of Windows will also work on the new one --
compatibility, in computing terms.
As a result, each new version of Windows carries the baggage of its
past. As Windows has grown, the technical challenge has become
increasingly daunting. Several thousand engineers have labored to
build and test Windows Vista, a sprawling, complex software
construction project with 50 million lines of code, or more than 40
percent larger than Windows XP.
"Windows is now so big and onerous because of the size of its code
base, the size of its ecosystem and its insistence on compatibility
with the legacy hardware and software, that it just slows everything
down," observed David B. Yoffie, a professor at the Harvard Business
School. "That's why a company like Apple has such an easier time of
Microsoft certainly understands the problem, the need to change and
the potential long-term threat to its business from rivals like Apple,
the free Linux operating system, and from companies like Google that
distribute software as a service over the Internet.
In an internal memo last October, Ray Ozzie, chief technical officer,
who joined Microsoft last year, wrote, "Complexity kills. It sucks the
life out of developers, it makes products difficult to plan, build and
test, it introduces security challenges and it causes end-user and
Last Monday afternoon, James Allchin, the longtime engineering
executive who leads the Vista team, held a meeting with 75 Windows
managers and senior engineers to discuss the status of Vista. On
Tuesday morning, Mr. Allchin met with a handful of his lieutenants and
told them of the decision to push back the consumer introduction, a
move that was announced publicly later that day, after the close of
the stock market.
Brad Goldberg, a general manager of Windows program management, who
attended the Tuesday morning meeting, said he was not surprised,
because he had been involved in the decision. "But it's a different
place than Microsoft a few years ago would have wound up," he said.
Like other Microsoft executives, Mr. Goldberg bristles at the notion
that little innovative work has come out of the Windows group since
XP. In the last five years, he said, Microsoft has released two
versions of the Windows Tablet PC software intended for pen-based
notebook computers, and four versions of Windows Media Center. To
combat viruses plaguing Windows, much of the engineering team focused
for 18 months on fixing security flaws for a downloadable "service
pack" in 2004.
"The perception that nothing new has come out of the Windows group
since XP is just so far from the truth," Mr. Goldberg said.
But last Thursday, Microsoft reorganized the management of its Windows
division. Steven Sinofsky, 40, a senior vice president, was placed in
charge of product planning and engineering for Windows and Windows
Live, a new Web service that lets consumers manage their e-mail
accounts, instant messaging, blogs, photos and podcasts in one site.
Mr. Sinofsky, a former technical assistant to Bill Gates, the
Microsoft chairman, was one of the early people in the company to
recognize the importance of the Internet in the 1990's. He comes to
the Windows job from heading Microsoft's big Office division, where he
was known for bringing out new versions of the Office suite - Word,
Excel, PowerPoint, Outlook and other offerings -- on schedule every two
or three years.
The move is seen as an effort to bring greater discipline to the
Windows group. "But this doesn't seem to do anything to address the
core Windows problem; Windows is too big and too complex," said
Michael A. Cusumano, a professor at the Sloan School of Management at
the Massachusetts Institute of Technology.
The Vista delay, Microsoft executives said, was only a matter of a few
more weeks to improve quality further, not attributable to any single
flaw and done to make sure all its industry partners were ready when
the product was introduced. Vista will be ready for large corporate
customers in November, while the consumer rollout is being pushed back
to January 2007.
Mr. Allchin conceded in an interview that the decision was "a bit
painful," but he insisted it was the "right thing." Mr. Allchin, 54,
will continue to work on Vista until it ships and then retire, as he
said he would last year.
Microsoft will not say so, but antitrust considerations may have
played a role in the decision that Mr. Allchin called the right thing
to do. As part of its antitrust settlement, Microsoft vowed to treat
PC makers even-handedly, after evidence in the trial that Microsoft
had rewarded some PC makers with better pricing or more marketing help
in exchange for giving Microsoft products an edge over competing
In the last few weeks, Microsoft met with major PC makers and
retailers to discuss Vista. Hewlett-Packard, the second-largest PC
maker after Dell, is a leader in the consumer market. Yet unlike Dell,
Hewlett-Packard sells extensively through retailers, whose orders must
be taken and shelves stocked. That takes time.
Hewlett-Packard, according to a person close to the company who asked
not to be identified because he was told the information
confidentially, informed Microsoft that unless Vista was locked down
and ready by August, Hewlett-Packard would be at a disadvantage in the
year-end sales season.
Vista was also held up because the project was restarted in the summer
of 2004. By then, it became clear to Mr. Allchin and others inside
Microsoft that the way they were trying to build the new version of
Windows, then called Longhorn, would not work. Two years' worth of
work was scrapped, and some planned features were dropped, like an
intelligent data storage system called WinFS.
The new work, Microsoft decided, would take a new approach. Vista was
built more in small modules that then fit together like Lego blocks,
making development and testing easier to manage.
"They did the right thing in deciding that the Longhorn code was a
tangled, hopeless mess, and starting over," said Mr. Cusumano of
M.I.T. "But Vista is still an enormous, complex structure."
Skeptics like Mr. Cusumano say that fixing the Windows problem will
take a more radical approach, a willingness to walk away from its
legacy. One instructive example, they say, is what happened at Apple.
Remember that Steven P. Jobs came back to Apple because the company's
effort to develop an ambitious new operating system, codenamed
Copland, had failed. Mr. Jobs convinced Apple to buy his company Next
Inc. for $400 million in December 1996 for its operating system.
It took Mr. Jobs and his team years to retool and tailor the Next
operating system into what became Macintosh OS X. When it arrived in
2001, the new system essentially walked away from Apple's previous
operating system, OS 9. Software applications written for OS 9 would
run on an OS X machine, but only by firing up the old operating system
The approach was somewhat ungainly, but it allowed Apple to move to a
new technology, a more stable, elegantly designed operating
system. The one sacrifice was that OS X would not be compatible with
old Macintosh programs, a step Microsoft has always refused to take
"Microsoft feels it can't get away with breaking compatibility," said
Mendel Rosenblum, a Stanford University computer scientist. "All of
their applications must continue to run, and from an architectural
point of view that's a very painful thing."
It is also costly in terms of time, money and manpower. Where
Microsoft has thousands of engineers on its Windows team, Apple has a
lean development group of roughly 350 programmers and fewer than 100
software testers, according to two Apple employees who spoke on the
condition that they not be identified.
And Apple had the advantage of building on software from university
laboratories, an experimental version of the Unix operating system
developed at Carnegie Mellon University and a free variant of Unix
from the University of California, Berkeley. That helps explain why a
small team at Apple has been able to build an operating system rich in
features with nearly as many lines of code as Microsoft's Windows.
And Apple, which makes operating systems that run only on its own
computers, does not have to work with the massive business ecosystem
of Microsoft, with its hundreds of PC makers and thousands of
third-party software companies.
That ballast is also Microsoft's great strength, and a reason industry
partners and computer users stick with Windows, even if its size and
strategy slow innovation. Unless Microsoft can pick up the pace,
"consumers may simply end up with a more and more inferior operating
system over time, which is sad," said Mr. Yoffie of the Harvard
Copyright 2006 The New York Times Company
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