The Top 10 Microsoft Stories of 2010 (So Far)

Microsoft's Ups and Downs

Six months into 2010 and Microsoft has already had its share of successes and failures. The Windows 7 operating system has won wide acceptance while its Office 2010 application suite and Kinect for Xbox game controller are winning kudos from channel partners and industry pundits. But its Kin mobile devices were a bust and its Courier tablet never saw the light of day. Microsoft is working hard to convince the world that it’s serious about cloud computing. There have been management changes in the company’s partner operations and Entertainment and Devices division, and it lost the title of ’Most Valuable IT Company’ – as measured by market capitalization – to Apple, of all companies. The following slides are our take on what we think have been the 10 most important Microsoft stories this year, so far. What would you add to this list?

Vista? I Don't Recall Any Vista

Microsoft launched Windows 7 back in October and as of June 24 the vendor had sold more than 150 million licenses, putting it on track for 300 million licenses sold by year’s end.

The new release of Microsoft’s desktop operating system seemed to be especially popular among consumers. But in a speech in early June, Tami Reller, corporate vice president and CFO of Windows and Windows Live, said 40 percent of its enterprise customers were evaluating Windows 7 or running it in pilots.

In May the American Customer Satisfaction Index released a report that said Microsoft’s customer satisfaction score rose 9 percent in the past year, largely due to Windows 7’s positive reception. So as of mid-2010 it’s safe to say that Windows 7 has achieved its Number One objective – making everyone forget the debacle that was Windows Vista.

Meet The New Boss

Less than three weeks before the Worldwide Partner Conference Microsoft said it was shaking up the leadership of its Worldwide Partner Group.

Allison Watson, (left), who held the corporate vice president post within the partner organization, was named corporate vice president of the U.S. Business and Marketing Organization, effective July 1. Jon Roskill, who had held the post to which Watson was moving, took over as Microsoft’s worldwide channel chief.

While Microsoft often makes changes to its executive ranks to coincide with the end of its fiscal year on June 30, the move raised some eyebrows, coming so close to the WPC. ’This does come as a shock,’ said Sandy Bateh, vice president of the Microsoft national alliance at Idea Integration, a Jacksonville, Fla.-based solution provider, in a story.

Partners generally gave Watson solid marks for her work, which included two revisions of the Microsoft partner program during her tenure. But some Gold partners are annoyed about one aspect of the current program, a requirement that they take part in a customer satisfaction survey.

A Feather In Apple's (Market) Cap

On May 26 Apple’s market capitalization surpassed Microsoft’s for the first time, making the iPhone and iPad purveyor the world’s most valuable information technology firm -- a title Microsoft held for a long time.

At the close of trading that day Apple’s market capitalization -- the total value of its outstanding shares -- stood at $222.1 billion while Microsoft’s was $219.2 billion. (As of the close of trading on July 8 Apple’s market cap had increased to $234.9 billion while Microsoft’s had shrank to $213.9 billion.)

The role reversal is ironic given that in 1997 Microsoft helped a foundering Apple with a $150 million investment. In 2000 when Steve Ballmer took over as Microsoft CEO the company’s market cap was $556 billion and Apple’s was $15.6 billion.

Nyah, Nyah, My Cloud Is Better Than Your Cloud

In the first half of 2010 Microsoft found itself in a pitched battle of claims and counter claims with Google over Microsoft’s efforts to expand its applications beyond the desktop and into the cloud.

Microsoft stepped up its efforts to convince customers to switch from Google Apps to Microsoft’s Business Productivity Online Suite (BPOS). And last month Microsoft launched its Office 2010 Web Apps, the cloud-based versions of its Word, Excel, PowerPoint and OneNote applications available through its Windows Live SkyDrive service, which compete head-to-head with Google Docs.

At times the taunting between the two vendors over whose products provide the best value for customers became snarky. Last month, for example, Microsoft suggested that Google offers sub-par customer support. "When was the last time you called Google for help recovering a lost Google Doc? Were you even able to find a number? My guess is, no," wrote Barbara Gordon, Microsoft corporate vice president of customer service and support, in a blog post.

Live, From New York, It's Office 2010!

In May Microsoft formally launched Microsoft Office 2010, the new release of the flagship (and, some would say, cash cow) desktop application suite. Not skimping on the hyperbole, Stephen Elop, president of the Microsoft Business Division, called the new product ’an epic release’ as he debuted the product at the NBC studios at Rockefeller Center in New York.

By the time of the May 12 event there were few surprises left about the product, however, given that it had already been downloaded by 8.6 million beta customers.

Microsoft also began shipping new releases of its SharePoint, Visio and Project applications that day.

Executives touted the potential productivity gains offered by Office 2010: Elop said switching from Office 2007 to the new apps could save two work weeks per year for every employee in an organization. And Microsoft said customers could earn back their investment in the new software within seven and a half months.

Killing The Kin, Anticipating Windows Mobile 7

Microsoft continues to have trouble extending its domination of the desktop to mobile computing.

On June 30, a little more than two months after they were launched with great fanfare, Microsoft mercifully pulled the plug on development of its Kin social networking-oriented mobile devices. The move came after rumors of dismal sales and lots of price slashing by Verizon and Best Buy.

The Kin was the company’s first Microsoft-branded mobile device.

Microsoft instead is focusing its mobile computing efforts on Windows Phone 7, the company’s mobile operating system that’s due to arrive on devices this fall. Earlier in the year Microsoft unveiled its plans to completely redesign the software to make it more consumer friendly. And in May the company trumpeted an IDC forecast that 30 million Windows Phone 7 devices would be sold by the end of 2011.

Still, Apple has sold around 50 million iPhones in the three years that product has been on the market, so Microsoft has some catching up to do.

Seeing The World Through Azure-Colored Glasses

In February the company debuted its Windows Azure cloud-based development and services platform, a critical component of the company’s effort to expand into the unfamiliar territory of cloud computing.

Microsoft is betting big on Azure: The company has spent more than $2 billion on cloud infrastructure, including building huge data centers that run Azure. It has 30,000 engineers working on cloud services. And at the TechEd North America conference in June the message from Microsoft executives was that ISVs and Microsoft customers should start using development tools like Azure and Visual Studio 2010 to take advantage of the efficiencies the cloud has to offer.

And Microsoft has just created a new division headed by Cindy Bates, previously vice president of the company’s U.S. Partner Strategy, Marketing and Programs Group, to grow sales of cloud technology to small and midsize businesses.

But as with mobile computing and other markets outside of Microsoft’s traditional desktop/data center sphere of influence, Microsoft is playing catch up to competitors who have already staked out a lead in cloud computing, including Google and Amazon. The question remains, can you teach an old software company new tricks?

Not All Fun And Games

One area where Microsoft is winning applause is in the video game arena. In June the company unveiled the long-awaited Kinect for Xbox, formerly code-named Project Natal, which will compete with Sony’s PlayStation Move and Nintendo’s WiiMotion Plus controller systems.

While the industry perception of Microsoft is of a company that doesn’t innovate well, solution providers said Kinect could change that. The system’s leading-edge interface, which uses body motions instead of a controller, could have applications in a range of areas beyond video games including healthcare, security and education.

Whole Lotta Management Shakeup Goin' On

Microsoft’s Entertainment and Devices division underwent a major shakeup on May 25, including parting ways with two longtime executives.

Division president Robbie Bach, (left), a 22-year Microsoft veteran, and J Allard, senior vice president of design and development for E&D and a 15-year company employee, will retire this fall, Microsoft announced.

The move was widely seen as giving CEO Steve Ballmer more direct control of the struggling division, which was responsible for developing the company’s Xbox, Zune and Kin products. While the Xbox has been a big money-maker for Microsoft, the company has discontinued the Kin and the Zune has struggled to gain a foothold in the digital audio player market.

A No Show In The Tablet Computer Market

While Apple’s iPad tablet computer has been all-the-rage in 2010, Microsoft quietly scrapped its own efforts to develop a tablet computer, the dual-screen Courier that was reportedly on track to debut in 2011.

While development of the Courier product was reportedly far along, it never reached the production stage and reports of its demise surfaced in April. J Allard, (left), was believed to be the main champion of the Courier and the decision to kill the project was seen as a factor in his decision to retire.

In recent months Apple’s and Microsoft’s competing visions of the future of computing were highlighted in dueling comments from Ballmer and Apple CEO Steve Jobs. At The Wall Street Journal’s D8 conference in June Jobs compared PCs -- the foundation of Microsoft’s core market -- to trucks that in the future will be used by a limited number of people for specific tasks. At the same conference Ballmer retorted that PCs would continue to be used in greater numbers, that owning different devices for different purposes was silly, and that the iPad was just a ’different form factor of PC.’

Meanwhile, iPad sales reached 3 million by June 22 and a flood of Android-based tablet devices are poised to hit the market soon.