When Vista debuted in 2006, it came with high expectations. Instead, it was high drama. Everybody hated it and Microsoft had to scramble to regroup. But is the Vista disaster really to blame for Microsoft missing the boat on the smartphone market? Retiring Microsoft CEO Steve Ballmer thinks so.
"If there's one thing I guess you would say I regret, I regret that there was a period in the early 2000s when we were so focused on what we had to do around Windows, that we weren't able to redeploy talent to the new device form factor called the phone," Ballmer said during a Q&A at Microsoft's financial analyst day.
"That would probably the thing I would tell you I regret the most, because the time we missed was about the time we were working away on what became Vista, and I wish we'd probably had our resources slightly differently deployed, let me say, during the early 2000s," he said. "It would have been better for Windows and probably better for our success in other form factors."
Timing Is Everything
Is Ballmer making too much of the Vista issue? That's what we asked Rob Enderle, principal analyst at The Enderle Group. He told us it was fair but also simplistic.
"The Vista issue did take Microsoft's eye off the ball and focused everything on the operating system," Enderle said. "The organizational structure at Microsoft lends itself to somebody getting all the marbles and somebody else not getting any -- and the phone guys just weren't as well positioned as the operating system guys."
Microsoft eventually rebounded from the Vista fiasco, releasing Windows 7 with a wireless focus in 2007. By the time it came to market, laptops were outselling desktops and the smartphone market was rapidly rising. The Apple iPhone made its debut in 2007, forever changing the cell phone market.
Too Little, Too Late With Nokia?
Microsoft also launched a reorganization. Before he announced his retirement, Ballmer announced a realignment that he is convinced will help the company better execute its strategy to deliver a family of devices and services that "empower" consumers and enterprises alike. He announced there will be four engineering areas: OS, apps, cloud, and devices. Microsoft will keep Dynamics separate.
With that reorg underway, Ballmer next moved to reverse mobile fortunes with Windows Phone 8 and the acquisition of Nokia. Redmond bet $7.2 million on the deal, which includes substantially all of Nokia's devices and services business, as well as licensing Nokia's patents, and licensing and using Nokia's mapping services.
But is it too little too late for Microsoft on the mobile front? Enderle doesn't think so.
"We've got a good decade left of growth in the smartphone market and people are more and more mobile," he said. "I think Microsoft can be a player but it's going to take a lot more effort because they are chasing it from behind."