Business Technology: Bugaboos Or No, It Seems Microsoft's Fine

Microsoft makes its hacker-resistant, pop-up-blocking, firewall-protected operating system, Windows XP Service Pack 2, available for download this week, and you can almost hear the sigh of relief in Redmond
Microsoft makes its hacker-resistant, pop-up-blocking, firewall-protected operating system, Windows XP Service Pack 2, available for download this week, and you can almost hear the sigh of relief in Redmond. Barring any unforeseen usability disasters, it will be an important step forward in the company's urgent security overhaul.

The release of SP2 caps a remarkable few months in which Microsoft has tamed some of its worst demons. I think back to March when a team of InformationWeek editors were on the Microsoft campus to meet with an unusually low-key Steve Ballmer. Talks had just broken down with the European Commission over antitrust issues, and Longhorn and critical patch-management tools had fallen behind schedule (see "Up For A Fight," March 29, 2004). Linux was a threat to Windows servers; piracy to Windows desktops.

But Microsoft's luck suddenly and unexpectedly changed. In April, longtime antagonist Scott McNealy, with a $2 billion check in hand, turned chummy. In May, Microsoft revealed joint work with ultra-antagonist No. 2, Oracle. In June, an appeals court diffused any remaining worries over the antitrust settlement with the Justice Department. In July, Microgoose laid 75 billion golden eggs to be distributed to investors over the next four years.

In the span of half a baseball season, the company has assuaged two of its fiercest competitors, put aside its most serious legal worry, and rewarded anxious investors. "I'm pumped up in a way that I haven't been, frankly," Ballmer crowed when he addressed financial analysts in July. And now, if SP2 doesn't go haywire in some unanticipated way, the company's about to get a better handle on security, too.

What are we to make of a revitalized Microsoft? At best, customers and other technology vendors can ride in the smooth wake of a company that's under full sail. The frustrating problems of interoperability between .Net and Java, Windows and Unix should be lessened if Microsoft, Sun, and Oracle cooperate as promised. And competitors should face a fairer fight if Microsoft abides by its U.S. antitrust agreement, as it's obliged to do.

The whole thing could unravel just as quickly as it's come together. If Windows bugs continue to run rampant, or if "integrated innovation" comes to mean that other companies can't play, then Microsoft will get thumped--and deserve it.

What's more, Bill and Steve haven't whipped every challenge. As I write this, my in-box is getting spammed and hit by infected E-mail. Key products--including Virtual Server, SQL Server 2005, Visual Studio 2005, and Windows Update Services--are late. Longhorn is being scaled back in scope if not pushed back in time, too. Patch management continues to suck up precious IT resources. The EU matter hasn't been settled. You can track these issues in InformationWeek's Windows Weblog (

And then there's the emerging bugaboo--open source. I say "emerging" because it's hard to see how the growth of Linux and other open-source products is coming at Microsoft's expense. Revenue rose 15% in the company's most recent quarter and profits 82%. With enemies like that, who needs friends?

Which brings me to a final point. As InformationWeek reported earlier this month, there's new evidence that Linux may be vulnerable to patent claims at the same time Microsoft is expanding its patent portfolio (see "Open-Source Stress," Aug. 9, 2004). That could move Linux higher on Microsoft's problems-to-deal-with list. For Microsoft, that doesn't seem to be such a worrisome prospect.

John Foley
Senior Editor at Large
[email protected]

Bob Evans is on vacation and will return in the Aug. 30 issue

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