100 Things You Must Know About Microsoft's Most Important Product Launch Ever

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It's been five long years--a lifetime in the software industry--since the release of Windows XP. During that time, Microsoft has invested nearly $9 billion in XP's successor, Windows Vista, and the Office 2007 suite of applications.

Finally, the wait is over.

At an invitation-only affair in New York this week, CEO Steve Ballmer will unveil Windows Vista, Office 2007, and Exchange Server 2007, an upgrade to Microsoft's market-leading e-mail platform. Desktop and server products last year accounted for 82% of Microsoft's $44.3 billion in annual revenue, underscoring how important the three new releases are to Gates, Ballmer & Co.

Microsoft has been through this drill many times before--late on key products, under fire from nimble competitors, hawking yet another desktop upgrade--and it's always been able to keep software licenses growing.

Can the company pull its magic yet again? Ballmer certainly believes so. In an interview last week, he called the new Vista, Office, and Exchange a "tremendous step forward" in personal and group productivity. To skeptics, Ballmer says: "Anybody who speaks to the contrary is in a different place than our customers."

Microsoft isn't forecasting a revenue explosion in fiscal 2007--more in the range of 13% to 15%, to around $50 billion, compared with 11% growth in fiscal 2006. That would still be quite a feat for the world's biggest software company, especially as its 30-year-old business model is under siege by software-as-a-service and search-ad-driven rivals. Who wants to pay a premium for PC software when other, more interesting applications are free online?

Vista and Office 2007 may be complete, but Windows Live, Office Live, and Office Online--Microsoft's software-as-a-service initiatives--are anything but. Office 2007 comprises 13 desktop applications, none of which is hosted on Office Online or Office Live. Ballmer's elusive when asked about that. "We have what we have online today," he says. "If you keep checking, there may be something new up there tomorrow."

The trick for Microsoft is to demonstrate that software on a PC and software as a service won't merely coexist but will evolve together into a better way of working. Microsoft increasingly uses the term "software and service" to describe this convergence. Ballmer envisions "a new generation of seamless, personalized experiences based on a balanced approach that combines the best of the Web with the richness of the client" (see "Steve Ballmer's Own Top 10 List".)

But Microsoft's not there yet. "We're driving very, very hard," says Ballmer. He contends Microsoft is in step with customers--not behind--as they begin to adopt software services.

NEXT: What IT pros must know.

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