Microsoft has had a rough time of it over the last year. Just six weeks ago, its share price had dropped 50% on the year. When it announced that its flagship Windows Vista client operating system and Office System had underperformed, things looked bleak for the whole year. After all, Windows 7 isn't due until the end of the year and the next release of Office hasn't even gone into beta.
The global downturn has exacerbated the problems for Microsoft but there is good reason to be positive in the medium term. In the short term, however, things are likely to get worse before they get better. This is not so much about the global downturn but about the way Microsoft has been heavily dependent on a small number of products for the bulk of its income.
With Windows 7 now in release candidate, those few corporate customers who were planning deployment of Windows Vista are now looking carefully at Windows 7 and their Vista deployments are on hold. Office has had an update with Service Pack 2 which has introduced a lot of interesting stuff but those that want Office 2007 already have it. Without a new version, in the current market, there is no compelling reason for many customers to spend money of Office.
Combined, this means that Microsoft has to find other ways to get through the next nine months before Windows 7 ships. A week ago, most people would have seen little light at the end of the tunnel. As we leave Las Vegas and, in two week time, head to Los Angeles for TechEd, life looks very different.
One of the first things that came out of MMS was that the Management Tools business is up 20% year on year. With many of the key tools going into refresh at the moment, this is good news for Microsoft because it means that the work done over the last six years on the DSI and SDM initiatives is paying off.
Over the next year, while Microsoft completes and launches Windows 7, it will also release Windows Server 2008 R2 along with a lot of management tool updates. Many of those updates and new product versions have Windows 7 management at their heart. Finally, it seems, Microsoft is taking end to end management of servers and clients in a single suite of tools, seriously.
But it is not just about Microsoft. It has reached out heavily to hardware partners. Support for Intel vPro over wireless is one example. The new Pro packs from Dell and HP are also good examples. However, one announcement that was kept very low key was that HP is enabling its entire Insight Software suite so that it can be managed from System Center. This is a significant endorsement for Microsoft from one of its key partners and something that no other partner has done.