Microsoft Makes Lemonade: The Future Looks Bright, Software Giant Says

Every week, I get a bewildering array of Microsoft press releases, statements, and other bits of information. I don't share most of it with you on the theory that I'm a filter of sorts between the corporate promotions the software giant continually generates and the reader, who I imagine is generally too busy to care about the latest point release of Microsoft Streets & Trips or a puff piece about the newest Smart Personal Object Technology (SPOT) watch partner. However, once a year, Microsoft holds an event, the Microsoft Financial Analyst Meeting, in which it divulges its plans for the next year. The attending analysts, presumably, will go back to the office after a packed day of presentations and make recommendations to investors and Microsoft's largest corporate customers.

Unlike much of the public posturing that any large company must make, the information Microsoft reveals at its Financial Analyst Meeting is almost devoid of any marketing spin. Instead, the event is a nuts-and-bolts description of what the company is doing. As Microsoft customers, you need to know this information.

At the Financial Analyst Meeting, each of Microsoft's top executives discuss a core part of the company's business. The most interesting part of the meeting, in some ways, is the question and answer session, which comes in the event's final half hour. Here's what happened at this year's event.

Microsoft Chairman and Chief Software Architect Bill Gates discussed an important technology shift early in his presentation. "Today what we have is a natural extension that will be built into virtually all the x86 processors over the next couple of years," he said. "And so people who buy [AMD Athlon 64 or Intel's Xeon Intel Extended Memory 64 Technology (EM64T)] hardware will be able to run a 32-bit OS [or a] 64-bit OS. The 64-bit OS runs 32-bit software. And so slowly but surely, you'll see the applications recompiled for 64-bit, particularly things like database, where getting that extra memory size makes a huge difference in terms of the performance you can deliver." Not coincidentally, Microsoft this week announced a new beta of its x64 version of Windows Server 2003, awkwardly named Windows Server 2003 for 64-Bit Extended Systems, and the company will ship an x64 version of Microsoft SQL Server 2005 next year as well. For more information about these releases, visit the following URL: http://www.winnetmag.com/windowspaulthurrott/article/articleid/43413/windowspaulthurrott_43413.html .

Gates also highlighted the next version of Microsoft's OS for Tablet PCs, Microsoft Windows XP Tablet PC Edition 2005, which will be enabled on these devices when you install XP Service Pack 2 (SP2). As Gates noted, prices on Tablet PCs have gone down as performance has increased, but the most exciting news, perhaps, is the new functionality in XP Tablet PC Edition 2005, which includes a much-improved Text Input Panel (TIP) with in-place editing of handwritten text entries.

Microsoft is also moving beyond text input to what could prove to be the ultimate computer interface--speech. Microsoft's approach to speech synthesis is interesting: Although we have Web services that can connect customers to back-end data and services fairly easily, those services currently require a Web browser or other interactive software application and, thus, require a PC to access them. With speech synthesis, you'll be able to create telephone-based interfaces to these Web services and let customers use them without a PC, from anywhere. Kevin Shaughnessy, a product manager from the Speech Server team at Microsoft, demonstrated a prototype hotel-booking service that works via telephone, using speech synthesis to create realistic, plain English interactions between the caller and a computer on the other end. And because the service uses the same back-end data and Web services as the Web version, you won't have to rebuild it from the ground up.

Microsoft Senior Vice President of Windows Client Will Poole discussed Windows XP Service Pack 2 (SP2) at length. I've examined this product extensively here in Windows & .NET Magazine UPDATE and will likely revisit it when Microsoft releases the final version, but let me reiterate that XP SP2's proactive security enhancements are both boon and curse. My advice is to evaluate this update, identify any application and Web site incompatibilities--and there will be some--and then roll it out immediately. XP SP2 is an important update, raising the security baseline of the XP client significantly. And as Gates noted, SP2 represents the most R&D dollars the company has ever put into a free upgrade, further underlining my belief that SP2, in effect, constitutes an entirely new version of Windows.

From a management standpoint, XP SP2 is an important milestone. SP2 has more than 600 new Group Policy Objects (GPOs), almost doubling the number in XP. And, as Poole noted, the GPOs are all related to security. You can also configure clients to have multiple operational profiles--for example, one profile when connected to the domain and another profile when not connected to the domain. So you'll likely want to lock down clients appropriately when they're connected through a Wi-Fi, the 802.11b wireless standard, Access Point (AP) at a Starbucks or an airport. I'll discuss this functionality in detail in a future Windows & .NET Magazine UPDATE commentary.

I find it somewhat telling that, although speakers mentioned Longhorn numerous times during the event, few pearls of new information appeared. Gates referred to Longhorn twice but said little of note. Poole said that Longhorn will be more "manageable and deployable" than today's Windows OSs but offered few specifics. Microsoft Senior Vice President of Information Worker Steven Sinofsky, the person in charge of Microsoft Office development, noted that the next version of Office will take advantage of key Longhorn presentation technologies and enable better document collaboration. Microsoft CEO Steve Ballmer even downplayed Longhorn when he said that Microsoft's biggest long-term bet wasn't Longhorn but was the more generic concept of product innovation; in fact, that was the only time Ballmer mentioned Longhorn at all.

During the Q&A session, however, Longhorn came up immediately. Given the constant delays of this product, I'm not surprised. But I found it interesting that Longhorn was as-little mentioned as the company's previous propaganda champion, Microsoft .NET. With the sole exception of Microsoft Senior Vice President of Server and Tools Eric Rudder, few executives talked about .NET at all.

When asked why the company was so quiet about Longhorn, Gates said that the core Longhorn technologies were coming along well but hinted that further delays were coming. "The next milestone for us is getting a beta out sometime next year," he said. "And that will be the point at which the feature set and the schedule will be pretty much locked down. So it's a release that's driven by the breakthrough features, and we'll have a strong sense of exactly what gets in and what the schedule looks like when we get that beta out some time in the next year." Ballmer added, "It's bigger than anything we've ever done ... It's a whole new developer platform, and getting the whole new developer platform done is harder than just making incremental improvements in user and administration features."

The executives waffled a bit about whether the next version of Office, currently code-named Office 12, will require Longhorn. "Those are the things that will be figured out as we move toward the beta," Gates said.

Microsoft's business is big, convoluted, and intertwined, and if you're a Microsoft shop, it pays to keep current on where the company is heading. If I haven't covered something that you're interested in, please let me know. The company has made videos and transcripts of each presentation available on its Web site, along with downloadable versions of each executive's Microsoft PowerPoint presentation. http://www.microsoft.com/msft/speech/fy04/archivemtg2004.mspx