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2007: Microsoft's top 5 challenges

Microsoft faces its most important year

It was a rough 2006 for Microsoft as it weathered the long delays of Windows Vista and Office. But as the software giant heads into 2007, the newest incarnations of its cash cows are now available to businesses and will soon launch to consumers. Despite finally shipping its two flagship products, the next 12 months are shaping up to be Microsoft's toughest ever, with major challenges in the form of its next-generation services and cross-vendor interoperability.

Sell Vista and Office (and Longhorn)

These two product lines are the foundation of Microsoft's existence, and they've just come in for the biggest-ever overhaul. Chris Liddell, Microsoft's CFO, told shareholders in November that he expects revenue growth in fiscal year 2007 of 13 to 15 percent, and with Office and Vista accounting for more than 90 percent of its revenue, those two products need to hit the opposition for six.

The question is: will corporate users bite? Microsoft has reorganised its executive ranks as part of its Vista/Office 2007 launches, so if things go haywire both heads and revenue will tumble.

Ray Ozzie Live

Ozzie, Bill Gates' replacement as chief software architect, has made many public pronouncements about the dramatic impact services will have on computing, and 2007 is the time for Ozzie to crank Microsoft's wheels of progress against the likes of Google.

"There are all sorts of business model issues around software-as-a-service that Microsoft has struggled with and is quite nervous how it will all play out," says Dwight Davis, an analyst with Ovum Summit. "Those issues have been bubbling in the background, but in 2007 it comes to the fore."

Cross-vendor interoperability

Steve Ballmer said in announcing the interoperability partnership with Linux rival Novell that the pair were giving "customers greater flexibility in ways that they have certainly been asking". And the questions won't stop in 2007 as Microsoft needs to come to terms with the realisation that the corporate world isn't all Windows.

The newly standardised Open XML file format, which is the default in Office 2007, is one big step. "From a milestone point of view, standardising Open XML is a signal that we have finally gotten into a much more global and open world," says Guy Creese, an analyst with the Burton Group.

Consistency, consistency, consistency

Microsoft is pushing integration across its products, especially in areas such as security, connectivity, business intelligence and real-time communications. "If they are doing something like supporting certificate-based authentication, IPv6, network access protection, I expect this to work across all platforms," says Fred Wettling, infrastructure architect for Bechtel. "When I look at Vista, Windows Mobile, Windows Embedded, those are all operating systems and there are differences there."

Licensing clean-up

In 2001, Microsoft said it was making volume licensing easier and ushered in Licensing 6.0 and Software Assurance. The dust from the resulting customer backlash is still settling. In 2007, the company's Software Protection Plan and its software "kill switch" are tied into licensing, including requirements for a corporate licence validation infrastructure. Could this be another backlash in the making?


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