Closing the Door to Microsoft Vista

General Motors (GM) may take a detour around Vista, the latest computer operating system from Microsoft (MSFT). The automaker has encountered so many speed bumps getting Vista to work on its machines that it may just wait for the next version of Windows, due in 2010 or 2011. "We're considering bypassing Vista and going straight to Windows 7," says GM's Chief Systems & Technology Officer Fred Killeen.

Vista taxes all but the most modern PCs with hefty processing and memory requirements. Many of GM's PCs can't even run the system. "By the time we'd replace them, Windows 7 might be ready anyway," Killeen says. Then there are compatibility problems with all the software that needs to run on Windows. GM's software vendors still haven't ensured all their programs will run on Vista trouble-free. So the company is sticking with Windows XP for now. Killeen figures GM could install Windows 7 in three or four years.

Equal Parts Rejection and Acceptance

Many of Killeen's counterparts across Corporate America are finding themselves similarly vexed by Vista. The resulting delay or rejection of Microsoft's flagship product is stepping up pressure on the company to expand other areas of its business, including online software. Vista was first released in late 2006, but the dismay with it has come into sharper focus as slower-than-expected uptake affects Microsoft's bottom line, Google (GOOG) spiffs up its own free versions of competing software, and corporate tech managers move to put more Apple Macs on employee desks (BusinessWeek, 5/1/08).

Microsoft says it has sold 140 million copies of Vista as of Mar. 31, about the same percentage of all PCs as ran Windows XP at this point in its lifetime. The 140 million includes consumers who have to take the latest version when they buy a new PC as well as businesses that are entitled to Vista rights under licensing agreements, regardless of whether they end up using the system widely.

Among corporate users, it's nothing new for companies like GM to skip releases of Windows, says Mike Nash, a corporate vice-president at Microsoft. He points to customers including Continental Airlines (CAL), Bank of America (BAC), Cerner (CERN), and Royal Dutch Shell, which are installing Vista on thousands of machines, as evidence of the system's acceptance. For their part, consumers are warming to the improved performance and availability of popular software such as Apple's (AAPL) iTunes and Intuit's (INTU) QuickBooks on Vista PCs. "We're seeing tremendous transition to Vista, particularly in the consumer space," Nash says.

Vista vs. Web-Delivered Software

Even as Vista catches on with some users, Microsoft recognizes the need to streamline Windows development as computer users increasingly turn to Web-delivered software, instead of regularly upgrading PCs to run the latest power-hungry programs. "The rush to get into a new product doesn't really exist like it used to," says Al Gillen, an analyst at market researcher IDC. "Killer applications that pull you forward are becoming fewer and further between."

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