Microsoft's Top 10 Milestones for 2005

It's time to polish up the crystal ball, gaze through the cloudy skies encircling Redmond and make some predictions for the new year.

Some folks seem to think Microsoft was humbled by its legal and technology challenges in 2004. But I disagree. I don't see a kinder or gentler Microsoft emerging in 2005.

After watching the Softies for two decades, I can tell you they are hardly ready to roll over. There's still a lot of plotting and scheming happening in Redmond's hallowed halls. And that will make the coming year anything but predictable. Nonetheless, predict, I will try.

I have a tough act to follow, given how surprisingly accurate I was in my 2004 predictions. Either I just made my guesstimates too obvious, or I was lucky (or both). I predicted no Yukon or Whidbey until 2005 (check); no Longhorn until 2006 (check); no Microsoft CRM 2.0 in 2004 (check); and that Microsoft would create a new program to undercut Linux in international markets (check — Windows Starter Edition).

(Pat, pat. Sound of Microsoft Watcher patting herself on the back.)

But what about 2005? In the past, it was as easy as taking candy from a baby to predict correctly that the Redmondians would miss many of their ship targets. But now that the company has moved to a new policy of publicly acknowledging feature cuts designed to get promised wares out the door, Microsoft ship dates are less likely to become slip dates.

With that aside, what will be the big Microsoft milestones in 2005? Here are my best guesses:

1. The European Union antitrust remedies will be ineffectual, and ultimately, overturned.
Who is going to want to buy a product known as "Windows XP Reduced Media Edition" that will cost the same as the full Windows XP release but not include as much functionality? This thing's going to make Windows Millennium Edition look like a runaway best seller. And that will be just the tip of the iceberg. Given its past track record in convincing authorities that Microsoft the Monopolist is not doing anything illegal, Microsoft will ultimately prevail in having the EU remedies stayed and, some time in the next five years or so, overturned.

2. Microsoft will pay off Novell and Real Networks, as part of Redmond's campaign to clean up its lingering lawsuits.

Novell must have considered Microsoft's $500-million-plus settlement with the company inadequate. Why else dredge up a lawsuit over incidents that occurred almost a decade ago? Real Networks must be holding out for more cash, too, as it has yet to settle its antitrust claims with Microsoft. Could Real's Rob Glaser be angling for a deal like the one cut by Computer and Communications Industry Association chief Ed "Take the Millions and Run" Black?

3. Microsoft will add a handful of new countries to its XP Starter Edition program, while continuing to insist that it is seeding international markets for humanitarian, not competitive, reasons.

So far, there are five stripped-down, cut-rate Starter Editions on the market: In India, Indonesia, Malaysia, Russia and Thailand. We expect to see a handful more in the coming year, but with fewer mentions of Linux and piracy attached to them. Microsoft says Starter Edition versions are for users who've never owned a PC before. But it's worth noting that the Starter Edition concept didn't get its start until Linux began making inroads into this entry-level market.

4. The Sun-Microsoft technology partnership won't advance much, and will show even more signs of unraveling at the seams.

Microsoft and Sun have postponed several times the announcement of the first fruits of their technology partnership, announced back in April 2004. It seems crazy that the pair can't manage to coauthor a press release outlining their intentions to collaborate on Web services and digital-identity standards. And you know that Sun CEO Scott McNealy won't be able to refrain from criticizing the Evil Empire for much longer. Watch for more increasingly public back-biting, rather than closer cooperation, between these two long-time adversaries in 2005.
5. There will be upheaval in Microsoft's mobile/embedded devices division, resulting in a change in strategy and management.

We predicted last year that something had to give in Microsoft's mobile division. After all, how long can the smallest of Microsoft's seven business units continue to promise that Microsoft is poised to become the leader in operating systems that power cell phones and PDAs? At Microsoft's financial analyst day this year, mobile chief Pieter Knook gave a lackluster performance. While there are lots of pretty devices powered by the Windows Mobile platform, it just doesn't seem like the mobile unit has a compelling and concrete strategy for growing its business.

6. Microsoft's biggest announcement of the year won't be Yukon (SQL Server 2005) or Whidbey (Visual Studio 2005). Instead, it will be an as-yet-unannounced anti-virus/anti-spyware subscription service for which Microsoft will charge.

Microsoft says it has yet to decide how it will package the anti-virus and anti-spyware technologies that it acquired from GeCAD and Giant Company Software, respectively. But we hear the decision has been made, as has the delivery mechanism. Watch for Redmond to roll out at least a beta of a combined anti-virus/anti-spyware subscription service in the coming year.

7. While it's the server and tools division that has the most announcements on its plate for 2005, MSN will continue to roll out new offerings at an equally rapid clip. MSN will roll out not only two new search services (Web and desktop), but a whole family of new subscription services aimed at consumers and small/mid-size businesses (SMBs).

Speaking of subscription services, the folks over at the MSN division will continue to roll out new offerings in the new year. Besides the aforementioned security service (see item 7), we're expecting a new MSN storage service to make its debut in the early part of 2005.

8. Microsoft officials will make a concerted effort not to use the "L" word (Longhorn) until September's Professional Developers Conference. But that still won't help Windows XP gain much traction.

No one in the Windows client division wants to talk Longhorn. And with good reason. Microsoft took a lot of flack for talking about Longhorn too early. Then, after releasing a preview of Longhorn client over a year ago, the Redmondians changed direction and exorcised the WinFS file system from the product. But just because the Windows team wants to focus on Windows XP (which still has two more years to live before Longhorn arrives) doesn't mean XP will gain new converts at an exponential pace. If XP does gain traction in 2005, we bet it will come from Microsoft's anti-piracy campaign, not from its moratorium on Longhorn PR.

9. Microsoft won't let the EU antitrust case or Longhorn-PR lockdown stop the company from continuing to integrate more currently separate products and technologies into Windows.

Just because the company's trying to clamp down on over-hyping futures doesn't mean Microsoft will stop "innovatively integrating" more technologies into Windows client and server. Windows Server R2, due out in the latter half of 2005, is all about bundling; it's a collection of various features and functionality released as downloads and feature packs that Microsoft is bundling into a single release. And we're expecting Microsoft to bundle at least a piece of its anti-virus/anti-spyware technology (see item 6) right into the Windows client, with regular updates provided via subscription. For a while I was thinking Microsoft might have a secret interim release of its Internet Explorer browser ready to launch in 2005, but now I don't think so. Even at the risk of losing market share, the company is going to stick to the party line that IE is an inextricable part of Windows.

10. Microsoft will increasingly play the patent card when competing with Linux. Although company officials have downplayed the extent to which Microsoft is threatening customers and partners with the risk of patent-infringement lawsuits if they go with Linux, we hear this is an increasingly key piece of Microsoft's competitive strategy. With Microsoft vowing to file 3,000 patent applications during fiscal 2005 alone, we expect the company to rattle the patent sabers even more in 2005.