Microsoft Releases Windows Vista to Business Clients

NEW YORK – Microsoft Corp. (MSFT) launched its first new computer operating system in five years Thursday, saying that despite delays, the product's emergence is perfectly timed for PC users who increasingly need to coordinate information from a dizzying array of sources.

Opening an hourlong demonstration and press conference at the Nasdaq Stock Market, Microsoft CEO Steve Ballmer acknowledged that Windows Vista should have been out long ago.

"I should probably say it's an exciting thing to finally be here — and that's all I'll say about the past," Ballmer said, before adding: "This is the biggest launch in our company's history, that's for sure."

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Businesses that buy Windows licenses in bulk have first crack at PCs with the new operating system or at upgrade discs for installing Vista on existing machines. Consumers won't be able to get Vista on home PCs until Jan. 30.

Microsoft and computer vendors contend that Vista will make Windows machines more secure, powerful and graphically dynamic, especially when combined with other products Microsoft is releasing simultaneously.

Those include new back-end server software for businesses, as well as Office 2007, which brings sweeping changes to widely used programs such as Word, Outlook, Excel and PowerPoint.

Ballmer said the new offerings were suited to businesses that need to link staff, partners, documents and corporate data in far-flung locales and to manage information that comes in various formats over the Web.

The new version of Excel, for instance, packs vastly increased number-crunching abilities. The Outlook e-mail program performs noticeably faster searches for tidbits buried in messages — and it can integrate voice mail and instant messages when used with Microsoft server software.

"I think we really have the most comprehensive lineup our company has ever put in place," Ballmer said.

Much is at stake for Microsoft.

Most of its revenue and almost all of its profit comes from Windows and Office, funding the company's sexier ventures into video games and music players and giving it the cash it needs to fight a wide world of rivals, from open-source startups to big names like Google Inc. (GOOG), Oracle Corp. (ORCL) and IBM Corp. (IBM)

Microsoft shares were down 9 cents, or 0.3 percent, at $29.48 in afternoon trading Thursday on the Nasdaq Stock Market.

The most noticeable changes in Vista involve three-dimensional graphics and much better search capabilities, but the software also incorporates huge changes behind the scenes.

Programs have less access to the core of the operating system, closing a vulnerability that malicious hackers have giddily exploited in the past. Vista also includes basic anti-virus software.

Of course, no software can be 100 percent safe; Ballmer would have been foolish to claim that Vista is hacker-proof.

But he did promise big improvements: "The reduction in the number of vulnerabilities that ever present themselves will really be quite dramatic," he said.

Even with all the touted improvements, analysts expect Vista to only gradually appear on PCs, especially in big organizations where upgrading can be a costly, complicated affair.

Gartner Dataquest predicts that it will be 2010 before Vista outnumbers the previous operating system, Windows XP, on business computers.

A company with 10,000 employees, for example, likely has 1,000 business applications, many of which need to be tested on Vista before a company can switch its PCs to the new operating system, said Gartner analyst Michael Silver.

That process often takes 12 to 18 months and lots of labor by the technology staff.

In other words, for a large business to implement Vista right away, it would probably have to have been an eager-beaver type that experimented with Vista during its "beta" phase, which began in mid-2005.

In the meantime, the current operating system, Windows XP, works just fine for most companies — especially with a security-enhancing patch known as Service Pack 2 that Microsoft released in 2004.

PC makers say Vista will enable computers to do things that previously were difficult or costly. For example, Lenovo Group Ltd., the world's No. 3 PC maker, says Vista greatly enhances data-backup tools it builds into its machines.

"All those capabilities are going to be one step better with Vista," said Clain Anderson, Lenovo's director of software peripherals.

But many buyers want more dramatic reasons to change their PCs.

Kamal Anand, chief technology officer for TradeStone Software Inc., a Gloucester, Mass.-based provider of supply-chain software, examined test versions of Vista and Office 2007 and found "no compelling need" to upgrade his company's 100 PCs and laptops anytime soon.

Instead, Anand expects Vista and Office 2007 to slowly permeate TradeStone as it buys new PCs for employees in coming years.

"Nobody wants to go through the extra time and effort and money to upgrade an existing, well-working system," he said.

Users of Office 2007 will immediately be struck by an overhaul in how commands are presented. Gone is the familiar menu structure in favor of a "ribbon" atop the screen that reorders commands by when they are likely to be needed.

The system is meant to unlock many features that were hard to find in previous generations of Office, but it might take some retraining time.

Another potential drag for Office is that the world has changed considerably since the last major release in 2003.

Inexpensive, open-source alternatives to Office have gained traction. And rivals such as Google are increasingly delivering spreadsheets, word processing and other tools for free over the Internet, an attractive choice for smaller companies.

At Tabblo Inc., a Cambridge, Mass.-based startup that lets people assemble, print and share online photo collections, CEO Antonio Rodriguez expects to upgrade many, though not all, of the company's 25 PCs to Vista throughout 2007.

Tabblo's staff expects Vista to make it easier to back up files and synch data over multiple computers. Rodriguez and crew also have energetically adopted Microsoft's latest Web browser, Internet Explorer 7.

But Office 2007 holds few such attractions for his company. Tabblo employees have largely abandoned Excel and Word for free programs on the Web, praising the flexibility that comes with having files stored online.

Just about the only Office program Rodriguez still uses is PowerPoint for presentations.

"To me, Office 2007 is a complete non-event. I have no interest in an upgrade," he said. "Most of what I like about computing now lives online."

Microsoft has been hustling to improve its own mechanisms for delivering and updating software online, which in turn has led to speculation that the next operating system upgrade will come in a series of incremental improvements rather than in one fell swoop, Vista-style.

Indeed, Ballmer had said before Thursday's event that Microsoft won't take so long to churn out its next operating system.

Asked where Windows can go from here, given the huge revamp that Vista represented, Ballmer said there were several possible improvements, including more aggressive changes to Windows' file-based storage system, sharper video connectivity and a better networking infrastructure.

"We took great strides forward," he said Thursday, "but there's still so much to do."