Microsoft's Slo-Mo Scramble

A new delay in its operating system signals its struggle to keep up in a Net-speed world

When Microsoft Corp. disclosed on Mar. 21 that the next upgrade to its Windows operating system, called Vista, wouldn't be available for consumers until January, the reaction was one of disbelief. After a five year wait, there would be yet another delay in the release, likely putting a damper on holiday PC sales. ``They have totally lost their way,'' exclaims Michael A. Cusumano, a professor at Massachussetts Institute of Technology's Sloan School of Management. Some employees have lost patience, too. Mini-Microsoft, an anonymous insider, posted a blog item calling for heads to roll: ``People need to be fired and moved out of Microsoft today. Where's the freakin' accountability?''

Though Microsoft isn't moving people out, it is moving them around. Sources say that Steven Sinofsky, who has run the company's Office franchise, will be tapped to oversee the next version of Windows. The news was first reported in The Wall Street Journal. It amounts to a demotion for Brian Valentine and Chris Jones, the two executives with hands-on responsibility for Windows Vista. Microsoft declined to comment on the move.

Yet the delay raises larger questions about Microsoft's ability to innovate at today's pace. While the company dominated the PC era, it now finds itself in a Web free-for-all. Its strategy of taking years to update its software looks positively archaic compared with fleet Internet companies such as Google Inc., which seem to unveil new software every few weeks.

Today, Microsoft's Windows is the equivalent of an unwieldy supertanker. One reason is that during the period Microsoft was being prosecuted for antitrust violations, the company integrated many new features and functions into the operating system -- including its Web browser. That created a huge tangle of interdependencies. Vista is loaded with 50 million lines of computer code and has involved thousands of programmers. And even after Microsoft completes a new operating system, it needs to spend about a year testing how it will work with a dizzying array of hardware. It tests the software on hundreds of PC models and thousands of printers, keyboards, and other peripherals.

Some outsiders believe it's time for drastic action. ``I'd like to see them build a new operating system from the ground up that's much simpler and smaller,'' says MIT's Cusumano.

Microsoft is experimenting with faster ways of developing software. Last November, Microsoft Chairman Bill Gates announced new online applications under the umbrella of Windows Live and Office Live. The company has launched test versions of a dozen services, and more are on the way. The newfound speed is evident. Its classified ad Web site was created in four months by five people. ``I can do quick-twitch releases monthly,'' says Blake Irving, a corporate vice-president for MSN Communications.

But these are all pieces of software that run on top of Windows. Microsoft insists that it doesn't need to overhaul its approach to developing that all-important software. ``Nothing about the announcement says there's something fundamentally wrong with the Windows model,'' says Brad Goldberg, general manager of Windows product management. Still, he says, the company plans to deliver future Windows upgrades more frequently. New releases could come out every year or two.

Yet the software giant may be forced to make more substantial changes to the way it builds Windows. Delays like those with Vista could hurt the loyalty of consumers and corporations, especially as stronger alternatives emerge from Apple Computer Co. and the Linux operating system. Unless Microsoft comes out with Windows upgrades more quickly and smoothly, it risks losing ground in the rapidly changing world of computing.

By Steve Hamm

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