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10 Predictions For Microsoft In 2008

CRN takes a look ahead at some decisions and events that could take place in and around Microsoft in 2008.

2008 is going to be a whopper for Microsoft from a product release standpoint, with February's three-pronged megalaunch of Windows Server 2008, Visual Studio 2008, and SQL Server 2008 looming large on the horizon. CRN takes a look ahead at some decisions and events that could potentially take place in and around Microsoft in the coming year.

1. Microsoft will extend the February 2009 system builder deadline for Windows XP Professional.

In a sign of the still-strong demand for Windows XP, Microsoft in September extended the deadline for sales of new direct OEM PCs with XP installed from Jan. 31, 2008 to June 30, 2008. Many system builders expect (and hope) that the vendor will soon decide to extend their current Jan. 31, 2009 deadline by at least six months.

Microsoft has come a long way in terms of listening to what their customers and partners want, and it wouldn't be surprising to see them extend the system builder deadline for XP, said John Kistler, principal at J&B Technologies, a St. Louis-based system builder. "Microsoft is now really in tune with its customers' and partners' needs," he said.

2. Windows Genuine Advantage will continue to cause grief for users

WGA is designed to combat piracy by installing software on users' PCs that periodically checks to see if their copies of Windows are authentic before allowing them to download updates. But in 2007, technical glitches and human error caused at least two major incidents in which thousands of Windows users were mistakenly identified as software pirates.

The glitches were hardly surprising, though, as WGA has been a source of much frustration for customers and partners ever since Microsoft introduced it in 2005. Microsoft in January acknowledged that since it was launched, WGA had flagged more than a fifth of Windows users attempting to validate their copies of Windows, but that the rate of WGA false positives was less than one-half percent.

Microsoft recently said its WGA team has changed the way it rolls out updates to the back-end servers and has also been fortifying the infrastructure on which WGA is based. But given WGA's history, customers and partners that believe that false positives are a thing of the past are probably also planning to leave cookies out for Santa on Christmas Eve.

3. Microsoft will continue to cause insomnia for VMware executives

When Microsoft unveiled the public beta for its Hyper-V virtualization hypervisor last week, shares of VMware plummeted. If a beta release can have that sort of impact, the arrival of Hyper-V, currently slated for 180 days after the launch of Windows Server 2008, will have an even stronger effect, according to some Microsoft partners.

Microsoft plans to spark widespread adoption of its virtualization products through competitive pricing, and is positioning virtualization as a key feature of Windows. Ron Herardian, president of Global System Services, a Mountain View, Calif.-based solution provider, expects Microsoft to successfully take market share away from VMware through licensing and by tying virtualization to Windows.

"Microsoft, just by announcing Windows Server 2008 and Hyper-V, is freezing the market. If Microsoft announces it will be embedding virtualization and providing attractive licensing terms, people are going to wait," said Herardian.

Chris Amaris, CTO at Convergent Computing, an Oakland, Calif.-based solution provider, said next year will be when customers begin to ponder the question of whether to stick with VMware or go with Hyper-V. And since the Microsoft offering is going to have a better price point, "that's how they're going to get their foot in the door," said Amaris.

NEXT: Sharepoint's scary growth curve...

4. Sharepoint adoption will continue to grow and grow

Already one of the fastest growing offerings in Microsoft's history, Office Sharepoint Server was a big hit with partners in 2007, and adoption is sure to continue growing next year. Many ISVs have found healthy and sustainable revenue streams by building applications on top of the platform, for tasks such as project management, business intelligence and workflow.

In July at its annual financial analyst meeting, Microsoft announced that Sharepoint revenue grew 35 percent to more than $800 million in fiscal year 2007, and that Sharepoint is on track to become a billion dollar business.

Although it initially attracted interest primarily from medium and large enterprises, Sharepoint is now penetrating the SMB space, and channel partners are helping to deliver the message that content management and portals aren't exclusive to enterprises. And combined with Windows Sharepoint Services, a subset of Sharepoint features that Microsoft offers for free, this message will likely be heard by all segments of the market in 2008.

5. The channel will deal with a talent shortage in unified communications

While they're excited about the prospects of adding unified communications to their portfolio, some solution providers predict that the channel is about to face a shortage of talent necessary to deploy the technology. While this wasn't an issue for Microsoft partners in 2007, VARs have differing opinions of whether the same will hold true in 2008.

Not only will the sheer volume of demand for unified communications rise next year, so too will the complexity of deployments. But solution providers say a talent crunch could create opportunities for savvy partners to go out and create vision for unified communications and help organizations better understand the technology's strong points.

The challenge for some solution providers that are getting their feet wet in unified communications will be to realize that clients don't give second chances when it comes to technical glitches in their VoIP systems. VARs say that wherever VoIP is involved, clients' tolerance for downtime drops to zero, so the most important skill to develop is a deep understanding of mission critical applications.

NEXT: Impact Of Vista SP1...

6. Vista service pack 1 won't spur Vista adoption like XP SP1 did with XP

2007 was full of negative press about Vista. And even after it releases Vista SP1, Microsoft will need to step up its efforts to demonstrate the business case for migrating to Vista, says Todd Swank, director of marketing for system builder and solution provider Nor-Tech, Burnsville, Minn.

But Swank predicts that Microsoft will be successful in its efforts to make a solid business case for its much maligned OS. "Next year, I think Microsoft will start showing the compelling features of Vista that will convince people to make the investment to switch," said Swank.

However, one solution provider who requested anonymity said that until businesses really start to see the benefits of moving to Vista, resistance to the OS will continue to be strong.

"Why would people want to switch to Vista when so many performance tests are showing they can get better performance from XP? It just doesn't make business sense to switch, and at this point, migrating to Vista is a big investment," the solution provider said.

Matt Scherocman, a director at PCMS IT Advisor, a Cincinnati-based Microsoft Gold partner, expects Vista SP1 to be an important milestone that will significantly increase Vista adoption. "However, I think most of the actual issues will be fixed by better OEM support from a driver perspective than will actually be fixed by the service pack," he said.

7. Companies still won't be ready to buy their security from Microsoft

Microsoft's less than stellar security reputation causes some solution providers to roll their eyes at any mention of the vendor's security offerings.

Partners have referred to Forefront as "a jumble of Microsoft security products" that's difficult to install and doesn't take into account integration with third party applications that a customer may have.

"We're still not viewing Forefront as a core security component for a company's infrastructure -- we still see it as being tangential in nature," said one solution provider who asked not to be named.

Another solution provider said the lack of a coherent roadmap for Forefront makes it tough to recommend to his customers. "Microsoft originally said they were taking Frontbridge on as a subsidiary, but then it started to get integrated in Exchange and the hosted service for Exchange spam filtering. It's almost like they digressed after the acquisition," said the source.

"The ironic thing is that the Frontbridge product, which became Forefront Security for Exchange Server, was a rock solid product before Microsoft acquired it," the source added.

Still, Microsoft has high hopes for its security business. At Microsoft's Worldwide Partner Conference in Denver in July, executives unveiled plans to invest $50 million in security related sales, marketing and partner training efforts.

NEXT: Will XP SP3 Be Delayed?

8. Windows XP service pack 3 will be delayed at least a quarter

Microsoft is working on a third service pack for Windows XP, which is currently slated for release in the first half of 2008. But in light of the fact that Microsoft originally intended to release XP SP3 in 2006, most partners have adopted a wait-and-see attitude.

One system builder who requested anonymity expects Microsoft to release XP SP3 around the same time as Vista SP1, which is slated for Q1. There's also a belief in the channel, based on recent research, that PCs with Vista SP1 run slower than XP with comparable hardware, the source added.

"I think XP SP3 will wind up making the XP PC run more like Vista. Microsoft realizes that nobody wants Vista, so they're going to come out with XP SP3, which people will accidentally download because it's supposed to be 'better and improved'. Then, they'll realize they hate it, but won't be able to get it off their machines," said the source

But Todd Swank, director of marketing for system builder and solution provider Nor-Tech, Burnsville, Minn., says XP SP3 reflects Microsoft's desire to shore up the OS and its realization that some customers are staying on XP.

"If Microsoft recognizes that people are going to be on XP for a while longer, they want to make sure the experience is a good one," Swank said.

9. The release of Dynamics CRM 4.0 will have a bigger-than-expected impact on the SaaS market

With this week's release to manufacturing of Dynamics CRM 4.0 -- the first major update in three years -- Microsoft has put CRM suppliers such as NetSuite, Oracle, Sage, and SAP squarely in its crosshairs.

Ryan Toenies, CRM solutions vice president at Inetium, a Minneapolis-based VAR, expects Dynamics CRM 4.0 to gain significant market share in 2008 because it offers customers the option of on-premise, Microsoft- and partner-hosted deployments.

Some Microsoft partners have raised concerns that the hosted CRM applications, which Microsoft will make directly available to customers for a subscription fee, could compete with channel partners' own offerings. But a growing number of solution providers are eager to host Dynamics CRM 4.0 themselves and offer it to customers as subscription service.

For VARs that can make the necessary infrastructure investment, the partner hosted model holds the greatest potential, according to Toenies. "If you're looking at creating a vertical solution on top of CRM, this will allow you to host and offer services," he said.

People want flexibility in the IT decision making process and CRM 4.0 gives them the power of choice, says Mike Belongie, vice president of sales and marketing at Axonom, Minneapolis.

"I think Microsoft is going to kill Salesforce with the Dynamics CRM 4.0 release. It's now a truly a multi-tenant product, and I've been closing deals with the message that it's O.K. for customers to start out with the hosted version," said Belongie.

10. It Will Be Hotter Than Hades At WPC 2008

Um Houston, we have a problem: The average July temperature in the sprawling Texas metropolis where Microsoft's 2008 Worldwide Partner Conference will be held is 94 degrees. Fortunately, partners will most likely be distracted from the intense heat by the even more intense humidity. The good news is that Houston bills itself as the world's most air conditioned city.

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