Summary: Evidence from across the Web showing that Vista 7 did not have the impact Microsoft wished for

MICROSOFT is not having a good week, despite all the excessive hype which even Novell helps in creating. Yesterday we wrote about Microsoft's bad financial results [1, 2] and our reader David Gerard writes: "I see they managed to fiddle the numbers again this quarter, having set appropriately low analysts' expectations." Other possibilities exist [1, 2].

What not many people have realised is that Vista 7's launched failed to make an impact. It's almost as though something went terribly wrong because in previous launches of new versions of Windows there was a lot of fanfare and even AstroTurfing. IDG has remarked on Vista 7's launch parties as follows:

Are you just waking up and nursing a hangover after hosting one of those wild Windows 7 launch parties? No? Well, you at least attended one, right? Invited to one but had a scheduling conflict??

Let's face it, the Windows 7 launch party concept was a complete and utter failure. The YouTube video Microsoft created to market the launch party concept certainly got attention, but for all the wrong reasons. It was almost universally mocked and parodied. Just look at the endless list of ‘Related Videos' making fun of the launch party promotion.

One reader commented in the PC World forums to lament his attempts at hosting a launch party. After receiving only one response, which wasn't even the official RSVP, the reader examined the RSVP in more detail and found "it looked like the whole TON of apparently life-sucking legalese I had to agree to in order to HOST a party. With even GUESTS having to agree to everything short of giving up their BIRTHRIGHTS to Microsoft and its subsidiaries, heirs, etc., how is ANYBODY supposed to actually get people to do the "official RSVP?!?"

And on it goes.

Mary Jo Foley, one of Microsoft's biggest fans out there, got distracted (meaning she did not just put forth Vista 7 PR) by Microsoft's poor performance, especially where the cash cows -- namely Windows and Office -- are concerned. She wrote:

A day after Microsoft launched Windows 7, its first quarter 2010 results are in. And both Windows and Office — Microsoft’s biggest cash cows — took a hit.

For the quarter, which ended on September 30, Microsoft’s net income was down 18 percent, to $3.57 billion, and revenues down 14 percent, to $12.92 billion — both compared to the first quarter earnings for fiscal 2009.

Because Microsoft beat analysts’ expectations for earnings-per-share and Microsoft has continued to prove it can cut costs, the company’s stock price was up this morning. And because of strong pre-orders for Windows 7 (which didn’t go on sale at retail until October 22, which is during Microsoft’s next quarter), Microsoft’s press release is highlighting “the strong consumer demand for Windows,” even though the Windows division’s revenues were down to $3.98 $2.62 billion from $4.28 billion from the comparable quarter a year ago.

Microsoft said the first quarter of 2010 was the biggest quarter for Windows sales ever. But the numbers aren’t reflecting that fact...

Spin and lies, smoke and mirrors. Only a week ago we gave a new example of this.

Pseudonym George Orwell wrote:

From: George Orwell <nobody@mixmaster.it> Newsgroups: comp.os.linux.advocacy Subject: Vista 7 launch an utter failure! Date: Fri, 23 Oct 2009 23:10:31 +0200 (CEST)

Despite positive spinning by Microsoft the Vista 7 launch turned into€ one utter failure. The 'Windows 7 Launch Parties' were almost€ universally mocked and ridiculed by the press and the general public.€ The so-called 'Windows 7 Is The Best Sold Windows Ever' campaign turned€ out to be nothing more than channel-pushing, worse even than when Vista€ was launched, with retailers being prodded by huge discounts, which€ will disappear after launch. NO ONE is actually buying Vista 7. Sure,€  some clueless sod may buy some computer where the shit is pre-installed€ but that's about it. PC sales are NOT going to take off because€ Microsoft updates a few icons in Vista, smacked a new label on it and€ bribed a few journalist to write about it being a 'huge improvement'€ compared to its predecessor. Businesses aren't even contemplating€ upgrading their PC hardware and consumers are more concerned with€ keeping their jobs and being able to pay their mortgages.

The only real growth, especially in this recession, lies in dirt-cheap€ netbooks and Smartbooks, which is where M$ will meet its Nemesis:€ Chrome OS (Linux) on ARM.

Regarding the relative silence from Microsoft trolls in USENET, 'Homer' wrote:

From: Homer <usenet@slated.org> Newsgroups: comp.os.linux.advocacy Subject: The Silence of the Shills Date: Sat, 24 Oct 2009 12:51:28 +0100

Even Microsoft's army of Munchkins are silent at the unleashing of Vista 7. Compare the silence to the noise the shills made here in COLA, at the launch of Vista. It was like a zoo during mating season.

So what went wrong?

Apart from the fact Vista 7 is just a rebadged Vista, and so there's not really anything to announce, much less celebrate, Microsoft are probably keen to avoid looking like idiots, like they did last time, by screaming like a bunch of chimps about something that turned out to be nothing but an embarrassment.

And of course, with their Windows revenue rapidly going down the toilet, their budget probably wouldn't cover the necessary "marketing expenses", i.e. fake grassroots astroturfing and bribery, anyway.

I look forward to watching the Vole bleed to death, over the next couple of years. Let's hope it's all over faster than the SCO fiasco.

In response, writes another person:

Someone in this NG [newsgroup] correctly noted that M$ spends $500 million on€ marketing and advertising Vista 7, yet maybe twice that amount was€ spend developing it. That shows where their priorities lie: they see€ the trick of selling software as marketing it ocrrectly€ € € and making€ the right noises (or bribing people to make the right noises for them).

Anyway, the Vista 7 launch was very anti-climactic and wasn't even€ covered on the news. It's a non-event. I did my part trashing the€ Windows 7 launch by spreading rumours and FUD about it. My 'Windows 7,€ I Hate It Already!' campaign was very successful and was picked up by€ ZDNet.

Windows 7, I HATE IT ALREADY!

Matt wrote about Microsoft's bad results and produced hard evidence as follows.

From: Matt <matt@themattfella.xxxyyz.com> Newsgroups: comp.os.linux.advocacy Subject: 3rd quarter: 2009 vs 2008: PC unit sales up 1%; Windows revenue down 39% Date: Sat, 24 Oct 2009 09:39:09 -0500

Comparison of the quarter ended Sept. 30, 2009 to the quarter ended€ Sept. 30, 2008.

Note: Operating Income is the difference between operating revenues and€ operating expenses, roughly: earnings before interest and taxes.

Windows and Windows Live Division ================================= Revenue: (2.620-4.278)/4.278 = -38.76% Operating Income: (1.463-3.059)/3.059 = -52.17%

Microsoft Business Division (which produces MS Office) ====================================================== Revenue: (4.404-4.954)/4.954 = -11.10% Operating Income: (2.863-3.185)/3.185 = -10.10%

Entertainment and Devices Division ================================== Revenue almost unchanged. Operating income almost doubled.

References:

http://www.microsoft.com/msft/earnings/fy10/earn_rel_q1_10.mspx > Microsoft Reports First-Quarter Results > REDMOND, Wash. — Oct. 23, 2009 — Microsoft Corp. today announced revenue

> These financial results reflect the deferral of $1.47 billion of revenue, an impact of $0.12 of diluted earnings per share, relating to the Windows 7 Upgrade Option program and sales of Windows 7 to OEMs and retailers before general availability.

http://www.idc.com/getdoc.jsp;sessionId=LPAERBQQTNW3YCQJAFICFGAKBEAUMIWD?containerId=prUS22040709 > PC Shipments Rise 2.3% ... According to IDC€ € 

http://www.gartner.com/it/page.jsp?id=1207613 > Gartner Says Worldwide PC Shipments Returned to Growth in Third Quarter of 2009 > STAMFORD, Conn., October 14, 2009 -- The PC industry performed better than expected as worldwide PC€  shipments totalled 80.9 million units in the third quarter of 2009, a€  0.5 per cent increase from the third quarter of 2008

http://en.wikipedia.org/wiki/Operating_income

Cf. Second quarter 2009: Windows revenue fell 29% while PC shipments fell€  only 5% http://groups.google.com/group/comp.os.linux.advocacy/msg/693b13a999a71648

Looking at the news, we find that GNU/Linux already capitalises on Microsoft's losses. See for instance (from yesterday):

i. Collaboration suite from IBM, Canonical targets potential Windows 7 customers

ii. Windows 7 v Ubuntu 9.10: an illustrated guide

Enterprise IT managers, frustrated for the last three years by Windows Vista, have recently begun to move Linux from its traditional home in the datacentre out to user desktops. However, it's still very much a minority option and Linux's progress could be halted in its tracks by the release of Windows 7, which is widely seen as the logical upgrade for those still running XP.

Whether or not Windows 7 will actually put paid to Linux on the desktop remains to be seen. But to give you flavour of how the two platforms measure up, we've compiled a brief illustrated guide, comparing key business features as implemented in Windows 7 and the latest version of the world's favourite Linux distro — Ubuntu 9.10, otherwise known as Karmic Koala.

iii. Harry Tuxxer and the Curse of Windows 7

Harry stretched his legs at his workstation under the stairs. He had been there for the entire night debugging the latest iteration of Ubuntu Owl mail. It was vital that he delivered a message to the old wizard Stallmandore. The forces of darkness felt closer than ever and Harry's scar throbbed as it always did when proprietary software vendors were close by.

On problems with the "hype machine" we have:

i. Microsoft promotes Windows 7 with a bunch of giant Whoppers

Now some Asian dude is going to drop dead from eating enough cholesterol to kill anything that’s ever lived.

ii. Elgan: Is Windows 7 cursed?

The Today Show, which averages some 5 million viewers, hosted Microsoft CEO Steve Ballmer to officially launch the Windows 7 operating system. But what possessed the Today Show art department to show Windows 7 on an older MacBook Pro behind Ballmer?

Microsoft can hardly blame the Today people. The company did the same thing in one of its own ads. The laptop used in a TV commercial for Microsoft's Songsmith is a MacBook. Microsoft put stickers all over the Mac, including one strategically placed over the Apple logo, to hide the fact. Are Windows laptops really that hard to find?

iii. Five Ways Windows 7 Could Become another Vista

Windows 7 is finally here. The sun can shine and the birds can chirp. Ding dong, Windows Vista is dead! Perhaps that is a bit premature. Windows 7 hasn't been officially released for 24 hours yet, so its understandable if the jury is still deliberating. There are certainly those who think Windows 7 is nothing more than Windows Vista with an extra bell or whistle thrown in for eye candy.

iv. Windows 7… So what?

Windows 7 does reduce the ‘fat’. It requires less memory and made minor improvements to the ’snappyness’ of the Operating System.

However, these comparisons are against Vista, the PIG. Any improvements, can be regarded as an improvement, no matter how small, because Vista was really that bad. (Sure after a year or two and SP2 Vista was stable and usable). But, if you compare Windows 7 to XP, Windows 7 is still a PIG. It still consumes triple the RAM, Disk and CPU power, not to mention Graphics memory.

One of our readers, 'Goblin', wrote about unrealistic projections and also commented on Microsoft's results.

Oops Microsoft did it again!

Whilst our MS Faithful are praising the greatness of Vista 7 and the fact that they can get Vista users upgrading their OS to what Vista should have been in the first place, in the back of their minds must be the news that yet again Microsoft’s profits are down.

There are many more examples out there. It is too easy to be left with the impression that Vista 7 failed to make the desired impact when it launched, only to be further extinguished the following day by a huge reported drop in Windows revenue. It is about margins, not the number of sales; GNU/Linux forces Microsoft to reduce its margins and thus compromise profitability. ⬆