Recession Doesnt Rain on Microsofts Parade in 2008

by Joe Wilcox

• Microsoft Chairman Bill Gates gives his last Consumer Electronics Show keynote, and it is surprisingly tepid. His “last day” video is more inspiring.• Microsoft claims 100 million copies of Vista sold—that should have been stated as shipped and not necessarily deployed. Microsoft announces the number at CES, where Vista marketing is nowhere to be found.• The first of Microsoft’s corporate presidents, Jeff Raikes, announces his departure. He kicks off a year rife with executive exits.[Photo: Microsoft Chairman Bill Gates wins Guitar Hero competition at the Consumer Electronics show in Las Vegas. Photo courtesy of Microsoft.]

• Microsoft makes an unsolicited, $44.6 billion bid for Yahoo. Microsoft’s main objective is extending search share against Google, but the deal is wrought with integration risk because of product overlap.• Microsoft announces so-called “interoperability principles” that derive from actions already mandated by its 2004 European adverse antitrust ruling.• Microsoft launches 2008 versions of SQL Server, Visual Studio and Windows Server, but the products are incomplete. SQL Server is a no show and Hyper-V is delayed. Still, 3,000 people attended the product launch, Microsoft’s most important of the year. [Photo: Microsoft CEO Steve Ballmer introduces Windows Server 2008 in Los Angeles. Photo courtesy of Microsoft.]

• The European Union fines Microsoft, again, for $1.35 billion. Microsoft’s crime: Failing to disclose information to ensure interoperability between its software and that of third parties.• Microsoft acquires Credentica’s U-Prove security/authentication technology, which works on a simple principle: Enable secure transactions by revealing as little information as possible.• eWEEK survey foreshadows slow enterprise adoption of Windows Vista. One reason: Windows XP is in the way.[Photo: Windows Vista + Windows Live < Windows XP. Photo by Joe Wilcox.]

• Microsoft tacitly acknowledges that Vista demands too much from ultra-low-powered notebooks (later called netbooks) and licenses Windows XP Home until 2010.• Microsoft CEO Steve Ballmer makes the acquisition case directly to Yahoo shareholders. Can you say divide and conquer? Steve gives Yahoo three weeks to respond to Microsoft’s unsolicited takeover bid.• About freakin’ time, Microsoft releases Windows XP Service Pack 3.[Photo: HP Mini 1000 Vivenne Tam Edition comes with Windows XP Home Edition. Photo courtesy of HP.]

• Microsoft withdraws its Yahoo bid, with Steve Ballmer blaming Yahoo CEO Jerry Yang and his board of directors.• Scorned Microsoft offers to buy Yahoo’s core search business for $1 billion plus some additional investment and revenue sharing.• Bill Gates and Steve Ballmer are D6 conference first guests. During the event, Steve reveals that Microsoft has shipped 150 million Vista licenses; Windows 7 get its first public showing—of new touch features.[Photo: Throughout May, Microsoft and Yahoo lob jabs over the failed hostile takeover. Photo courtesy of Yahoo.]

• Google and Yahoo announce the search deal that Microsoft wanted to prevent. Months later, Google pulls out to avoid the U.S. Justice Department filing an antitrust complaint.• Bill Gates retires from full-time work at Microsoft to dedicate more time to philanthropy. He continues as chairman in a 20 percent role.• Microsoft officially stops selling Windows XP through the OEM channel, although PC makers can offer extra-cost downgrades with Windows Vista Business and Ultimate editions.[Photo: For Bill Gates’ retirement as full-time chairman, Microsoft re-creates the iconic 1975 photo featuring founding employees. Left to right, front row: Bill Gates, Andrea Lewis, Miriam Lubow, Marla Wood and Paul Allen. Back row: Bob O’Rear, Steve Wood, Bob Greenberg, Marc McDonald, Gordon Letwin and Jim Lane. Photo courtesy of Microsoft.]

• Fiscal 2008 closes strong: Microsoft reports fourth-quarter revenue of $15.84 billion, or an 18 percent year-over-year increase. Operating income is $5.68 billion, or 46 cents per share. For its fiscal year, revenue increases 18 percent year over year to $60.42 billion; operating income grows 21 percent to $22.49 billion; earnings per share grows 32 percent to $1.87.• Platform and Services division splits in two as Microsoft announces its second corporate president departure of the year: Kevin Johnson. That’s two of three presidents out in 2008.• Mojave Experiment: Microsoft tricks focus group participants into thinking they are using a new Windows version when it’s really Vista. The “experiment” makes customers look stupid, which isn’t good marketing. Strangely, the TV commercials that come later are pretty good in content and are the only real Vista marketing coming out of Microsoft.[Photo: Microsoft’s Mojave trickery is surprisingly effective marketing. Photo credit: Screen capture of Mojave Web site.]

• Microsoft ships 180 million Vista licenses, the last time the company discloses numbers in 2008.• New virtualization licensing relaxes 90-day limit on moving applications between servers, but the seeming customer benefit goes first to Microsoft.• Internet Explorer 8 Beta 2 is released to the masses. It’s the most impressive IE upgrade in a decade.[Photo: Microsoft ships Windows Vista on less than 50 percent of PCs shipped in third quarter. Photo by Joe Wilcox.]

• In the bizarro land of strange marketing, Microsoft releases the first commercial from its $300 million Windows advertising campaign. The first spot features Comedian Jerry Seinfeld and Bill Gates shopping for shoes. Later, Microsoft introduces “I’m a PC” as the next phase of the “Windows. Life Without Walls” campaign.• “Get Virtual Now” event promises Hyper-V release within 30 days; touts virtualization benefits.• Dark day Sept. 29 hits Microsoft hard, like other tech companies. Microsoft’s market cap drops $24 billion in 17 days.[Photo: Buddy Guy, in hologram form, jams with Quinn Sullivan during Microsoft’s “Get Virtual Now” event. Photo courtesy of Microsoft.]

• Microsoft’s fiscal 2009 starts off with strong first-quarter results: revenue of $15.06 billion, for a 9 percent year-over-year increase. Operating income is $6 billion and net income $4.37 billion, or 48 cents per share. But Client division disappoints and Microsoft lowers year guidance as global economic crisis spreads.• Professional Developer Conference 2008 opens with a big announcement: Microsoft’s new Azure Services Platform. Azure is an ambitious data center-based operating system.• Windows 7 makes a brash PDC debut. Microsoft takes early reviews seriously by giving bloggers and reviewers laptops preloaded with Seven.[Photo: Steven Sinofsky, Microsoft’s senior vice president for the Windows and Windows Live Engineering Group, discusses Windows 7’s new features. Photo courtesy of Microsoft.]

• Choosing a venue befitting the struggling global economy, Microsoft launched SBS 2008 and Essential Business Server 2008 via Webcast. Looming economic crises mute what otherwise should be an important product launch, as EBS is Microsoft’s first server product for mid-size businesses.• Windows Live Wave 3 officially launches. Finally, the services begin to feel like they belong together.• For a limited time, Microsoft offers 0 percent financing on Dynamics products, just a day after IDC cuts 2009 U.S. IT spending growth projections to 0.9 percent from 4.2 percent.[Photo: Small Business Server 2008 licensing costs increase over its predecessor. Photo courtesy of Microsoft.]

• Former Yahoo exec Qi Lu takes over Microsoft’s money-losing Online Services Business. Fixing the U.S. economy is probably an easier task.• Rumors swirl that Microsoft will have 10 percent layoffs around Jan. 15. When Microsoft issues pink slips, the economy is really bad.• Microsoft struggles with two zero-day vulnerabilities, for Internet Explorer and SQL Server.[Photo: Microsoft’s new Online Services Business chief, Qi Lu, addresses company employees about his plans for the beleaguered division. Photo courtesy of Microsoft.]