Windows
Ballmer established a process for gathering feedback from computer makers, and hes personally surveying customers — along with his teenage son — to make sure Windows 7 works. Early users, including Continental Airlines Inc., Starwood Hotels & Resorts Worldwide Inc. and the city of Miami, say they are upbeat about the software.
“The test feedback has been good, but the test feedback on Vista was good,” Ballmer, 53, said in an interview last week. “I am optimistic, but the proof will be in the pudding.”
Ballmer needs a winner. Microsoft has dropped 54 percent on the Nasdaq since he took over as CEO in 2000. For most of the past year, Ballmer ran the Windows business himself, and hes counting on Windows 7 to restore investor confidence after corporations and consumers snubbed Vista. About 80 percent of companies plan to switch to the software in the next two years, ISI Group, a brokerage firm in New York, said yesterday.
“Windows 7 is important for how Microsoft is seen in the marketplace, especially after how Vista was received,” said Ken Allen, a portfolio manager at Baltimore-based T. Rowe Price Group Inc., the seventh-biggest institutional holder of Microsoft shares. “It will be an important year for how Ballmer is viewed as CEO.”
Underestimating?
Wall Street is underestimating the impact of Windows 7, which debuts on Oct. 22, said Sarah Friar, a Goldman Sachs Group Inc. analyst in San Francisco. Analysts profit estimates for Microsoft, the worlds largest software maker, are 3 percent and 5 percent too low for 2010 and 2011, she said. The companys Windows sales will increase 9 percent to $16.3 billion in 2010, the first full year Windows 7 is on sale, compared with a 10 percent decline this year, she predicts. “We have big expectations for what Windows 7 can do,” Friar said.
Others remain unimpressed with Windows 7 and Ballmer.
“Ballmer needs to retire — its been a huge disappointment from a shareholders perspective,” said Dave Stepherson, a fund manager at Hardesty Capital Management in Baltimore, referring to Ballmers tenure as CEO. He helps manage $650 million, including Microsoft shares. Windows 7 wont change things because it doesnt have any “must-have” features, he said.
Microsoft fell 32 cents to $24.64 yesterday in Nasdaq Stock Market trading. The shares have gained 27 percent this year. Of the 35 analysts following the Redmond, Washington-based company, 24 suggest buying the stock, 10 say hold and one says sell, according to data compiled by Bloomberg.
Continental Airlines
Continental and Starwood say Windows 7 runs faster than Vista. It starts up and shuts down more quickly, and lets users preview the contents of windows by placing their mouse over the entry on the bottom of the screen. It also supports multi-touch navigation, letting users control the software using their fingers.
More Responsive
Continental says Microsoft is more responsive to suggestions than it was with Vista, when the airlines proposed features never made it into the software. Windows 7 now offers those options, such as better mobile access to corporate networks, said Eric Craig, managing director of technology at Houston-based Continental, the fourth-largest U.S. carrier.
Because Windows 7 can run on older machines, its more appealing to budget-conscious customers, Craig said. Continental can use the software on more than 60 percent of the PCs it already has, he said. Microsoft has developed tools that help customers upgrade operating systems and assess whether their applications will work.
“Were all struggling with the economic reset,” Craig said, adding that Ballmer should get a lot of the credit for focusing on the cost of Windows 7. “He really understands the incredible pressures on us to deliver with what we already have.”
Vista debuted in 2007 — two years behind schedule and more than five years after the previous version, Windows XP. Vowing never to go that long again between releases, Ballmer reshuffled executives. He put Steven Sinofsky, known for sticking to deadlines with Office releases, in charge of Windows development.
Exciting Product
Even then, Ballmer said he worried that Windows 7 wouldnt be exciting enough. That changed two summers ago, when he saw a demo of a math feature. Users could handwrite an equation onto a panel, and the software recognized the notation. Ballmer, who went to math camp as a kid, was impressed.