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Microsoft cuts call for pay-as-you-go Windows

5,000 job cuts suggest need for new strategy

Thursday's results also show that Microsoft still has some lessons to learn from Windows Vista, which appears to have come back to haunt the company.

Microsoft put considerable investment and time into developing Vista, expecting the OS to be more successful than it has been. In the middle of Vista's development cycle, the company also had to put out a major update to Windows XP in the form of a service pack that it did not charge for, also interrupting the normal revenue flow of its client business.

At the time it was developing Vista, Microsoft thought it could "change the PC market with a new OS," Directions on Microsoft's Rosoff said.

However, consumers as a whole did not rush out to purchase new machines just because they had Vista on them, and many companies opted to skip the OS altogether and continue to run XP instead.

Microsoft has now learned that Windows client is not going to be the kind of product that will "suddenly spur this huge wave" of PC market growth, Rosoff said, and it probably will approach the business with that in mind in the future.

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