One of the industry's top Microsoft watchers, Kirkland, Wash.-based Directions on Microsoft, has released its annual list of Redmond's top 10 challenges for the new year.
- Serve existing customers. Analysts said that the most important challenge for Microsoft in 2004 is what amounts to learning how to age gracefully. Product cycles are longer, and customers are not so fast to upgrade. Analysts said that, since Microsoft can no longer move as fast as it once did, it must pay attention to its existing customers and less to the pursuit of "software grand slams."
- Security. No surprise here. The vulnerabilities have overwhelmed any discussion of innovation. "Microsoft's patch management technologies are themselves a patchwork," analysts at the firm wrote. Microsoft says these technologies will improve. The company must deliver on its promises.
- Produce clear, reliable road maps. Customers need to know what's coming out and when. The idea of asking customers to put up cash and then giving them vague product sets and delivery dates is unrealistic, analysts said. Independent software vendors also need to know what's coming down the road. Knowing when service packs are coming and what they contain will help customers plan.
- Rebuild the partner network. Except for the largest enterprises, most companies purchase Microsoft software or integration services through a partner. Directions on Microsoft analysts said that the nature of the partnerships has changed over the years, with much action moving to the Internet and more functionality going into Windows. The company must use the partners effectively to stave off defections to Java.
- Counter Linux. The open source OS is starting to find enterprise traction, and Microsoft must figure out how to keep it at bay. Analysts said that Microsoft must stop Linux at the server, before it gets a foothold on the desktop. Microsoft won't have a new desktop OS to answer challenges from Linux for the next few years. Microsoft also has to improve its Unix migration story.
- Fix licensing. Microsoft is trying to make licensing easier, but instead the company really made it more complex. Software Assurance is still hard to understand.
- Keep Yukon on track. There are a lot of future products that are going to depend on another future product: the next version of the SQL Server database management software, code-named Yukon. Analysts said that it will be a challenge for Microsoft to manage all the future products -- such as Exchange, the file system for Windows PCs and other systems -- that are based on something that is yet to go to public beta. Microsoft needs to keep Yukon on track and make sure customers are aware of changes, and the impact those changes will have on Yukon and dependent products, they said.
- Manage management products. Microsoft needs to unify its systems management technology and do more to offer integrated solutions. The company talks about integration, but it hasn't really delivered yet.
- Court developers. Microsoft has to persuade developers to work with .NET so they can start creating applications for Longhorn, the next version of Windows.
- Target consumer efforts. Microsoft needs to make its consumer business profitable. Today, the only piece of the consumer business that is profitable is the Windows OS. Microsoft has the Xbox and the MSN businesses, neither of which are setting the world on fire. The consumer business is a critical counterweight to the various business cycles, the analysts said.
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