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We've all been hearing it -- Microsoft Corp.'s (NASDAQ: MSFT) failure to win over consumers and business users with the Windows Vista operating system is causing sales of the older Windows XP operating system to stay afloat. Microsoft doesn't want this, of course. It's true that the software maker has shipped more than 140 million copies of Windows Vista, but since Vista is the default operating system on millions of PCs, it's pretty easy to do that.

Some corporate customers, though, have bypassed Windows Vista completely and will wait until the next round. This is Microsoft's Achilles' heel -- some companies won't fix something that isn't broke. General Motors Corp. (NYSE: GM) even says that "We're considering bypassing Vista and going straight to Windows 7," in reference to Microsoft's next operating system due sometime in the future. Yes, many large companies are indeed taking Windows Vista in -- but it's mostly due to not having much choice with changing out entire computing infrastructures for a global corporation. It takes a visionary IT leader to do that, and those are hard to come by in many cases.

And therein lies a big problem for Redmond. If customers aren't excited about its new operating system, why would they think Windows 7 will be any better? It's hard to fathom Microsoft pouring $5 billion into Vista and being shunned left and right. The software maker's operating system and Office productivity business subsidizes all its other products where it may make little or no money. But what if Windows is destined to become a slow-growth industry? If that's the case, where is Microsoft's growth engine going to come from in 2010? 2012? It's making gobs of money now. Will it last? When its main product underwhelms much of the market, the question has to be asked.

"The Co-Op of Three," which includes Intel Corporation (NASDAQ: INTC), Apple, Inc. (NASDAQ: AAPL), and Microsoft Corporation (NASDAQ: MSFT) seem to be surviving the economic downturn. According to Businesswire:

Intel Corporation today announced record first-quarter revenue of $9.7 billion, operating income of $2.1 billion, net income of $1.4 billion and earnings per share (EPS) of 25 cents.

The earnings helped to propel the stock higher in after hours trading to the point where Intel is flirting with an almost 8% gain since the close of the regular session. The street was happy not to hear another piece of horrifying news and took notice of how well that Intel held up during this difficult economic environment. Even better, margins were up 4% YOY to a whopping 57% for the full 2008 fiscal reporting period. Much of this has to be a result of the key relationship that Intel has with Apple.

Probably one of the greatest technology deals of recent time has got to be the co-op of Apple/Intel/Microsoft. Finally thinking abut the bigger opportunity, these three giants approached the competitive landscape with a resolve to dominate. Since the day Apple's operating system allowed the running of Microsoft's Windows OS, there was no stopping the expansion. Intel's part in all of this was also key. By producing a chip that would help bring these two behemoths together, it has been rising a nice wave of income. No longer does Intel have the same competition as it did only a few years ago.

Apple, Inc. (NASDAQ: AAPL) has really never been down for the count as a company, although it's been on hiatus a couple of times in its 30 plus year history. Never before has the company seen such product and financial success, though, than in the 2001-current period. Under current CEO and co-founder Steve Jobs, the company is a force in the entertainment business along with ramping up its fortunes in the PC business where it started. We won't even mention the hardware business (iPod, iPhone).

But the one elusive crown that Jobs would probably love to see shift to his company is the operating system used by PC customers. Now that current Macintosh computers can run Microsoft Corp.'s (NASDAQ: MSFT) Windows Vista (or XP) operating system, is Jobs slyly trying to wrestle the operating system of choice crown from his longtime competitor? After all, a Macintosh customer can switch between a full Mac OS (operating system) on his or her PC and Microsoft's Windows with a keyboard press. Use one OS for work-related things and another for -- everything else. Guess which is which? And don't think that's just what Jobs envisions when he's made every single Mac computer being sold capable of running Microsoft's Windows. Perhaps he's trying to win a long war with Microsoft on the basis of Apple's cooler-than-cool hardware rather than software?

CNN had a story yesterday showing gains in Apple Inc.'s (NASDAQ: AAPL) market share in operating systems. The recent gains in market share must be hard for Microsoft (NASDAQ: MSFT) to ignore. It also has to make life harder for Linux and other O/S makers.

The data released yesterday, showed that the MacIntel systems had a 4.01% share in December and the Mac OS share was 3.28%, making it a combined 7.3% share in December. While the data shows that Microsoft still dominates with a 91.8% market share, it also shows that it has lost ground for seven of the last eleven months. What is interesting is that out of this 91.8% market share for various Windows O/S sales is that 76.97% is still windows XP and only 10.43% is for Windows Vista.

CNN's story covers a survey from Net Applications that uses a sample of visitors to some 40,000 websites operated by its clients rather than a total number of computer systems sold. So there is still some room for interpretation here.

Linux was shown as having a 0.63% market share. While that is up 10.5% from the previous 0.57% readings, it shows that Mac truly is the envy of Linux creators. It is also interesting that, at least according to this survey, much of the Windows sales might still be going into Windows XP rather than Windows Vista.

Microsoft (NASDAQ: MSFT) continues to sit on a cash pile worth over $30 billion. What is it going to do with all that money? Continue to develop underwhelming products like Windows Vista? Probably. Take on Google (NASDAQ: GOOG) in the internet advertising revenue arena? Of course. Roll out a consumer marketing blitz to make sure the word Microsoft continues to be a relevant household name? Surely.

Early in 2008, the world's largest software company will begin spending $200 million to $300 million to advertise its wares: the Xbox 360, the newer Zune digital media players, Windows Vista PCs and Windows Mobile.

Is Microsoft's (NASDAQ: MSFT) Windows Vista computer operating system really that bad? According to PC World, the five-year, $5 billion operating system from the world's largest software company was the tech industry's "worst disappointment of 2007." Ouch.

Although a statement like that will surely get readers fired up on both sides, users of the Vista operating system have to ask: is it really that bad? Although many of the changes in the Vista operating system are "under the hood" and not really all that recognizable to the average PC user, the brunt of criticism about Windows Vista is the 5 years and nearly $5 billion spent on the operating system. And so the question is asked: is this the best Microsoft could do?

Sure, the requirements of a PC to run Windows Vista at optimum speeds are quite a bit higher than from the older Windows XP, but that means Windows Vista on recent PCs will perform much slower than on brand-new machines. Is that a fault? Depends on your point of view. How about the non-compatibility of older software with the newer Vista operating system? Is that a disappointment? Perhaps, perhaps not. How about the costs for Windows Vista outside of having it installed on a newer PC? $199 and up -- is that too high of a cost for what is being perceived by many customers and reviewers as a "minor upgrade?" What's your take?

[Via Engadget]

[Disclosure: I own MSFT shares as of 12-18-07]

Microsoft (NASDAQ: MSFT) released the first public service pack for its Windows Vista computer operating system Wednesday amid a lack of fanfare by the tech media. Well, from what I saw, anyway. Microsoft's "service pack" is generally regarded as a collection of bug fixes that address certain problems within the software itself, although Microsoft as always downplayed that angle, maintaining that a service pack is more akin to adding new and exciting features more than anything else.

Why is this significant? Windows Vista, which the world's largest software company hopes will continue turning its cash-flow machine for many years to come, still needs major acceptance from large businesses and non-consumer segments. Windows Vista has not sold at retail at near the level Microsoft had hoped, although almost every new PC comes with at least the "Basic" version of the operating system.

Imagine a product that many people do not think works well but sells millions of copies. Well, that's Microsoft (NASDAQ: MSFT)'s operating system, Windows Vista.

According to the FT, both business and personal computer users have tried to stick with older versions of the Microsoft OS, Windows XP, but adoption is still good enough to drive outstanding earnings for the world's largest software company. As the newspaper says: "None of this, however, has had any discernible impact on Microsoft's financial fortunes. Many companies buy their software from Microsoft under an arrangement called Software Assurance, which lets them upgrade to new software whenever they like in return for a fixed annual payment."

Perhaps that is what having a monopoly is all about. Even if products are not perfect, they are adopted. Even if companies normally would not make an investment, they are on an "automatic upgrade" program.

It might be nice to think that Linux or Apple's (NASDAQ: AAPL) new OS, Leopard, would get wider adoption, but based on most figures, the Mac has no more than 5% of the global PC market and no open-source desktop program has significant market penetration.

It's good to be king.

Douglas A. McIntyre is an editor at 247wallst.com.

In a move I thought I'd never see, Microsoft (NASDAQ: MSFT) looks to be reversing course a little and trying to get a version of its Windows Vista computer operating system as an option on the $100 "One Laptop Per Child" project spearheaded by MIT to place computers into the hands of as many kids in distressed and poor nations as possible.

The project itself is highly admirable, as its goal is to connect kids to a world that expands their horizons and hopefully leads some countries from destitute status to growing, civil communities that are empowered by the knowledge that lives on the internet every day, as well as connecting citizens to one another and students with much-needed tools.

In the past, Microsoft has shunned the project, probably since it was slated to use a generic Linux operating system that provides no revenue to anyone -- not exactly a business Microsoft wants to be in. However, it also takes future customers away from Microsoft's revenue prospects in developing countries where PCs may pave the way for computer industry growth in the future. Talk about a dilemma.

When Microsoft Corp.'s (NASDAQ: MSFT) first service pack for Windows Vista comes down the chute sometime in 2008, there are indications that massive sales of Vista will happen to those corporate customers who have been "waiting in the wings" for this to upgrade. Historically, bigger corporate citizens wait on deploying new operating systems from Microsoft until the first "service pack" is released. These service packs are generally a huge collection of software "bug" fixes that address many issues that are present when a new piece of software launches.

Even mighty Microsoft is not immune to this rule: "ship when 85% complete, since you'll never ship on time if you need to get to 100%." That's a repeat of a rule I've heard from many software companies, most of which release product when not complete, as was the case with Windows Vista. After all, hitting a shipping deadline is more important than iron-clad products. Standard rule of thumb here.

But will the revenue spigot of Windows Vista sales really see some action once SP1 (service pack 1) is released for Windows Vista next year? From many indications, it will. Support on WindowsXP and Windows 2000 won't last forever, so in effect Microsoft will goad customers into upgrading to Windows Vista (call it standard strong-arm tactics). The release of a 'comforting' initial service pack will ease the security-minded pain of many of these customers, and the non-OEM (original equipment manufacturer), retail sales will finally fall in line to where Microsoft needs them to be.

[Disclosure: I own MSFT shares as of 8-31-07]

Here's a scenario which is quite unneeded by Microsoft Corp. (NASDAQ: MSFT). In the battle to create profit within the world of personal computers, it must be scary for "number one" when numbers two and three join forces. According to a report from Red Herring, that is exactly what is happening, sort of. I haven't heard yet if Microsoft is scared.

It would seem that Dell and Lenovo are each gearing up behind the Linux operating system and are preparing to take a flying leap right against Windows. Judging by the considerable negative banter I have encountered regarding a less than stellar Windows Vista inaugural performance, I would say Dell and Lenovo's move comes at a most opportune time.

Dell Inc. (NASDAQ: DELL) has fully embraced Linux, which has had fairly good response from domestic open source enthusiasts. Dell, for its part, is taking the operating system on a worldwide road show. Dell will be hard selling PCs loaded with the Linux operating system in several countries across the pond.

For number three PC maker Lenovo (OTC: LNGVY)'s part, it plans to introduce a broad range of Linux-outfitted laptops, a particularly strong endorsement of the operating system. To me this signals a recognition by manufacturers in the field that Windows Vista is shoddy, expensive and perhaps a bit arrogant, if I can use that word in this context.

To be honest I must admit that Dell has lost me as a customer. That is mainly due to Dell's decision to succumb to the wiles of Wal-Mart (NYSE: WMT). I thank Dell however for giving the nod to Linux, as that may very well be my chosen operating system for the computer I am soon to build. My computer building project shall be introduced on Friday and shall be fully chronicled on our sister site, DIYLife. I'm hoping that our BloggingStocks friends will come share their opinions as I build a computer from scratch. I will be soliciting reader input to help complete that project successfully.

After six months, I finally broke down and retired an older laptop to another use (a "family" PC) and went on the hunt for a newer laptop computer system a few weeks ago. This past weekend, a choice was made and a new slim box was purchased with a new notebook inside, ready to be torn apart the second I walked back in the door at home. Now, I'm no fan of large notebooks, like those with 17" screens or even 15.4" screens. I went with a smaller notebook with a 14.1" screen so that those extended typing sessions would be easier on my lap than a nine-pound monster. Of course, the new system came with Microsoft's (NASDAQ: MSFT) newer Windows Vista operating system.

Having had a few issues upgrading to Windows Vista in the past few months, I was already leery of the operating system, although it came pre-installed on this new notebook. Having two gigabytes of memory in the new notebook was the bigger factor I had looked for, since having plenty of operating memory is what makes things slick and fast according to the computer experts I had sought out for advice. Although I own Microsoft shares, many of the company's moves irk me; while many delight me (you'll know this from reading my various posts on Microsoft). Was Vista going to be a former or a latter product? Read on.

After about three days of installing software and working with this new laptop feverishly to meet deadlines and get things organized this weekend, I do say that Windows Vista is not only pretty but does work very fast and seems very stable. Some of the newer changes from Windows XP are taking a little getting used to, but I can live with it. So far, speed seems much faster than my previous laptop (bought at the end of 2006), although the technical specs are very similar. My verdict on Windows Vista so far is that it is a speedy and workable platform, and every single older application I installed (used previously on Windows XP) worked flawlessly with Vista. Whew.

Microsoft Corp. (NASDAQ:MSFT) does not want Apple Inc.'s (NASDAQ:AAPL) Mac owners to run the Windows Vista operating system on those machines, reversing a decision made just this week. In the "virtualization" world, Microsoft's current Windows XP computer operating system can be run inside of a "virtual software" environment on current Apple MacIntosh computers so that Apple fans can use those stylish Apple systems with Apple software but can still access the Windows environment for certain things (like work email or running Windows-only applications).

That arrangement works pretty well for the Windows XP operating system on current (or even older) Mac computers, but Microsoft has now said that it will only allow the bare-bones Windows Vista "Basic" operating system to be used in this virtual Apple Mac environment. Vista versions such as the "Premium" or "Ultimate" won't be allowed to be used with "virtualization" software at all on Apple systems.

However, with Apple systems now using Intel CPUs, installing Windows Vista alongside the Apple Mac operating system without this kind of "emulation" is no problem. Basically, Microsoft does not want customers using the nicer versions of Windows Vista on older Apple Mac machines made before Steve Jobs decided to use Intel chips in all Apple Mac systems.

Will this hurt the adoption of Microsoft's Windows Vista operating system growth? Probably not, but this move signals that Microsoft would like most Windows Vista customers to use non-Apple machines, like the commodity PCs from vendors like Dell, HP and Acer. Surprised? I'm not.

[Disclosure: I own MSFT shares as of 6-22-07]

Is Dell Inc. (NASDAQ: DELL) falling out of love with Microsoft Corp. (NASDAQ: MSFT)'s Windows Vista? First off, the company decided to bring back Windows XP as an option for an installed computer-operating system on its PCs. Then, in response to popular demand, the computer maker begins selling Ubuntu Linux as an installable option instead of Windows at all.

Then, in the midst of Microsoft shelling out half a billion to market and promote Windows Vista, the computer maker patches together what appears to be a slapstick promotional gadget to "entice" new Dell customers to see how Windows Vista is a superior operating system. After watching the video linked from here, I was left amazed -- this is the best a leading computer manufacturer can do to promote the product that comes installed on virtually all of its new PCs? What does Microsoft think about this half-hearted attempt at promotion of its flagship operating system?

Does Dell just not like Windows Vista or something? One could certainly get that impression, although I believe it is far from the truth. All the signals here have lined up to form a somewhat inconsistent angle from Dell's end on just what it wants to be. The company needs to be everything to every customer perhaps, which can be a recipe for disaster or can allow it to survive in short-term fashion (just not long-term). Entering Wal-Mart Stores (NYSE: WMT)just muddies the issue further and seems like a quick-fix experiment for now, but at least Dell's stance on operating systems offered is still a tad confusing.

Microsoft (NASDAQ: MSFT)'s Windows Vista operating system has now sold over 40 million copies since its launch at the end of January, according to company co-founder Bill Gates. That's all well and good, but then I've heard of many people stating that an upgrade to the new operating system ended in extreme frustration, with this writer included. My attempt to upgrade to the new operating system was met by one largely frustrating two-hour process. Result? I went back to Windows XP and returned to using an older Mac system that performs flawlessly.

One of the complaints that comes out of the Vista-bashing camp quite regularly is device compatibility. Hardware like printers, webcams and video cards may not work with the new Vista operating system yet, which causes computer owners with newer (but not that compatible) systems to curse to no end. After all, some folks would love to pay Microsoft for its new bright and shiny software, but not when it won't work with every piece of hardware they own and like.

But, a new operating system should not be expected to work with everything immediately after release, right? Consumers don't understand this in most cases -- to them, it's install Windows Vista and everything should work like it did with the older Windows XP.To that end, Microsoft has said that Windows Vista now supports 1.9 million devices. That's a gain from 300,000 since Vista was launched just in January. This proves to me that Windows Vista was launched not complete (but stable), which was a business decision I am sure Microsoft made with all data at hand. Can I fault Microsoft for it? No -- since almost every other company releases software not at 100%. If companies did, most software would never get shipped at all, right?