Top 10 Microsoft Stories Of 2008Top 10 Microsoft Stories Of 2008

In any era of change, there are bound to be many stories underscoring tension and difficulty as well as others pointing the way forward and laying out the new vision. 2008 was full of these for Microsoft.

The company is striving to find its footing as it shifts from long dominance in a proprietary client-server world to a more uncertain future where competition comes from open source, the Web and other corners. Old leaders are on the way out, while new faces and ideas are beginning to show their influence.

So, without further ado, the top ten stories of 2008 for Microsoft, still the 800-pound gorilla nobody can afford to ignore.

1. Bye, Bye Bill

There were plenty of changes in management at Microsoft in 2008, starting at the top with the company's co-founder and one of the most influential people in the history of computing. Bill Gates left his full-time role this summer as the company's chairman and chief architect to spend more time with his charitable foundation.

Microsoft rang in the new year as it has for a number of years, with Gates giving an address at the Consumer Electronics Show in Las Vegas, including a humorous video anticipating Gates' last day at the company.

As Gates' departure grew nearer, our reporters and bloggers took trips down memory lane and looked at how Gates might be remembered, as well as his legacy for business IT.

Microsoft also made its own glances backward and forward, telling information that it was ready to move on. It's impossible to replace Gates, but the company is certainly doing its best to fill the gaps. And Gates wasn't the only long-time executive to leave this year. Microsoft president Jeff Raikes also departed, to be replaced by former Macromedia exec Stephen Elop. Management change was in the air from the beginning of the year until its end.

2. To Yahoo Or Not To Yahoo

That was the question, and it's still an open one. A 10-month-and-counting saga to acquire all or part of Yahoo, or just hire away all of its top executives, began in February as Microsoft bid about $44.6 billion for the struggling search site in order to shore up Microsoft's online search and advertising position and give it some good Web properties.

Quickly, criticism arose that Microsoft might not be up for the challenge that a Yahoo acquisition would represent, both in terms of integration and in terms of passing anti-trust muster. Google, which would be the chief competitor of a combined Microsoft-Yahoo, (Microhoo?) cried foul. That criticism fell by the wayside as Yahoo's initial rejection of Microsoft's offer and further meddling led to a protracted debate about how Microsoft would respond, including a bid for just part of Yahoo or a hostile takeover. Ultimately, Microsoft pulled out of the bid altogether, ostensibly wiping its hands of Yahoo and sending Yahoo spiraling down. Later in the year, several parties tried to reprise the deal, not the least of whom was billionaire investor Carl Icahn, who raised the issue of a proxy fight for Yahoo's board. Microsoft toyed with going along with Icahn, who in the end settled with Yahoo as Microsoft backed off.

The company made a couple of important search acquisitions this year, including semantic search start-up Powerset and enterprise search vendor Fast Search and Transfer. It also signed a few notable search and ad deals with the Wall Street Journal and Facebook, and overhauled a few search products. It also introduced a merchandise search and shopping site that had decent reviews until it failed on the Friday after Thanksgiving. Through it all, however, Microsoft struggled to gain much of a foothold against Google, remaining in distant third place behind both Google and Yahoo.

Things come full circle. Microsoft remains intent that it has no interest in buying all of Yahoo, but new chatter has emerged since the November ouster of former Yahoo CEO Jerry Yang. By December, Microsoft had hired top Yahoo talent like former search chief Qu Li, and Microsoft CEO Steve Ballmer floated the idea of buying Yahoo's search and advertising business.

3. Vista Gets Better, But Criticism Remains

The year began with low expectations for Windows Vista, which had already gone through a drubbing from the press and reviewers in 2007. Reviewers continued complaining about glaring problems, like the presence of too many Windows versions. Throughout the year, news leaked out about the roots of Vista's problems, including a badly botched Vista Capable computer branding program.

Vista's bad rep was severe enough at the beginning of the year that many companies and some consumers bought new computers that had Vista installed, only to downgrade the new computers to Windows XP. information even wrote a guide on how to do it. Gartner warned at one point that "Windows is collapsing." Even Intel reportedly held off internal deployment, while the state of Maine said it would skip Vista altogether.

On the plus side, Windows Vista earned a reputation as being more secure than its predecessors, and the company cut the retail price of Windows. Uptake finally started increasing a bit, though probably not as much as Microsoft would have liked. The company got one service pack out the door to improve performance and other issues, and a second one is due soon, but Vista SP1 had a few problems of its own.

Microsoft announced early in the year that it would be shifting its Vista marketing strategy away from the poorly received "the wow starts now" campaign, but then didn't really do anything about it until ads started appearing mid-year. Microsoft began fessing up to Vista's earlier woes in July, and followed up with several new ad campaigns, one tricking consumers into believing they were using a new OS when it was Vista, another starring Jerry Seinfeld, and yet another mocking Apple's "I'm a Mac" ads. It remains to be seen whether all this spending and the incremental fixes of Vista will be enough to turn things around in 2009, especially with a bad economy. 4. Windows 7 Curtains Lift

With all the concern about Windows Vista, PC users (including the government) began craving information about Microsoft's next operating system, Windows 7. There were few leaks until early beta builds began appearing online and bloggers speculated endlessly about what would come next for Microsoft's flagship offering. For the first part of the year, all Microsoft would generally say about the next OS is that it was targeted for release about three years after Windows Vista, which would be early 2010.

Microsoft finally gave its first demos of Windows 7 in May, showing off the operating system's multi-touch support, similar to the iPod but on a larger scale. By that point, here's what we knew for certain about Windows 7:

That last bit prompted concerns Windows would continue to be bloated.

After a few months with no news, Microsoft unveiled Windows 7 to the world in October at the company's semi-annual Professional Developers Conference. It announced plans for a beta release in early 2009, with a release as soon as later that year. In addition to multi-touch, the new OS will get a new taskbar, better device support, better performance and better networking, among other things.

Microsoft has obviously learned a few lessons from Vista: it's been pressuring hardware manufacturers to test compatibility early and often, for example, and Microsoft says Windows 7 will be slim enough to run on netbooks. Early reviews of Windows 7 look promising, but doubters may still have their day if Microsoft can't deliver.

5. Windows Server 2008's Good Reviews

While Vista suffered, Microsoft's server operating system, released in February, did much better in the eyes of users and reviewers. For one thing, the launch went much smoother (despite the delay of a significant piece of the OS), thanks to a slew of new features and early sign-on by vendors looking to support the OS.

The new server OS included a slimmed down installation option called Server Core, command-line scripting with PowerShell, an improved management console, new versions of the .NET Framework and Microsoft's Internet Information Services Web server, and security technology called Network Access Protection. With power costs skyrocketing for data centers, Microsoft touted Windows Server 2008 as greener than its predecessors. However, a glaring omission to the initial release, server virtualization, was released later in the year.

Microsoft also continued to make inroads in trying to grow its market with a new small business server and powerful Windows Server-based supercomputers. By the end of the year, Microsoft was already talking Windows Server 2008 R2, which will improve Terminal Services, networking and virtualization capabilities. 6. Virtualization, Virtualization, And More Virtualization

Microsoft had long promised server virtualization in Windows Server 2008. Despite delays, Windows Server's Hyper-V technology finally showed up after tons of beta testing, beginning what could become a heavy battle with VMware and Citrix over the next few years. Microsoft saw possibilities for virtualization everywhere in 2008, buying a few companies and releasing waves of client virtualization and virtualization management products.

As VMware dug in, Microsoft started knocking on its door. Microsoft CEO Steve Ballmer and server boss Bob Muglia both told information that virtualization would be huge for Microsoft going forward, and that the company intended to compete with VMware and Citrix through cheaper, simpler virtualization that makes up the centerpiece of Microsoft's data center automation strategy and has forced others to respond already with discounts. Microsoft worked out a virtualization partnership with Sun and Novell, and released virtualization management software that would also manage VMware environments (with Citrix management to come). Reviews were generally positive, though it's clear Microsoft is playing from behind.

Microsoft's virtualization vision doesn't stop at the data center door. The company bought presentation virtualization company Calista Technologies and client virtualization vendor Kidaro Systems this year. It released the latest version of its Microsoft Application Virtualization (formerly SoftGrid) technology, and Merrill Lynch even showed off big plans that relied partially on Microsoft client virtualization technology. The company wants to play a big role in virtualization in the cloud.

7. Microsoft Jumps Into The Cloud

Microsoft has been seen by many as a laggard online, but consider 2008 the year Microsoft finally decided to get moving on the Web. It's the year the company pursued Yahoo, ramped up its advertising budget with the late 2007 acquisition of aQuantive, and finally expanded or otherwise made known its plans for SaaS cloud computing with versions of Windows and Office that run over the Internet. Microsoft is spending billions to succeed with new mega data centers, including one in San Antonio that information visited earlier this year.

The company opened the year with SaaS news, releasing a CRM service that aimed square at Salesforce.com. Later in the year, it released multi-tenant collaboration services in Exchange Online, SharePoint Online and Communications Server Online. Coca-Cola Enterprises signed up for 30,000-plus seats of dedicated tenant versions of the services, and partners jump on board with added services.

Microsoft said that it would finally be releasing a SaaS version of Microsoft Office as part of the suite's next release, though the final form remains hazy. Among the other big "software plus services" bets for Microsoft this year is Live Mesh, a synchronization and application development platform that will power, among many other things to come, collaboration features in Microsoft Office Web applications.

Microsoft is also looking to compete with the likes of Google App Engine and Amazon EC2 with a new cloud platform, Windows Azure. A three-year labor of love for chief software architect Ray Ozzie (with whom information finally spoke this year), Windows Azure is Microsoft's platform for cloud computing and development that will someday power all of Microsoft's Web apps and run Windows Server applications in the cloud.

While Microsoft made progress in 2008, there's much more to come from Microsoft when it comes to cloud computing. It has its work cut out to prove that it can deliver and to clear up widespread market confusion. 8. Baby Steps With Open Source And Open Standards

Taking a different tack from just a year earlier when it claimed patent infringement by open source software, Microsoft began taking hesitant, tentative baby steps (with numerous setbacks, of course) toward an embrace of open source and open standards in 2008. "If innovative work is going to happen in the open source community, I want it to happen on our platforms," Ballmer told information this year. Though likely pushed to do so by outside forces, Microsoft even made a big pledge in February to look for more places where it could support open source and open standards, and publish more documentation of its protocols.

One of the big battles of the year was over Microsoft's document file formats. Despite allegations that it corrupted the voting process with improper pressure and that Microsoft was looking to muddy the document standards waters, Microsoft saw its Office Open XML file format ratified by the International Organization for Standardization, launched an open source project to translate Office binaries into Open XML, and pledged to support the competing Open Document Format standard in Office 2007 Service Pack 2 due out next year. In other open standards news, many of Microsoft's online services released or announced this year make heavy use of web standards.

As for open source itself, Microsoft seems to be coming around to the view that it wants open source software to run on Windows and that it's time to toy with open source itself. Microsoft execs courted open source developers several times throughout the year, calling for cordiality. Microsoft continued making millions off Novell Linux, and invested in its development, despite disagreement within Novell about the deal. It looked to support development of open source third-party components for Office, released an open source installer and blogging platform, is extending its management software to support Linux and even became an official sponsor of the Apache Software Foundation.

Not that Microsoft didn't sometimes live up to its old ways of doing things out of competitive instinct. As recently as December, the company posted an interview with a company that claimed to save money with Microsoft versus open source, as if the choices were all or none. It also kept vague boilerplate risk language regarding open source in Securities and Exchange Commission filings that concerned some observers. Use of Microsoft's newly released protocol documentation also comes with a fee for anyone building commercial software, a fact criticized by some. Microsoft still has a long way to go convincing people that it is becoming more open, but it arguably took several plodding steps in the right direction in 2008.

9. Internet Explorer's Overhaul

Internet Explorer, Microsoft's market-dominant Web browser, has been called a lot of things, but it hasn't carried the mantle of openness and innovation in the last few years as Mozilla's Firefox rose like a rocket. Now, with the impending release of Internet Explorer 8, Microsoft hopes to shake things up a bit and staunch the bleeding.

Microsoft had already made some people a bit happier with Internet Explorer 7, the first major overhaul of the browser since the release of the now-maligned Internet Explorer 6 way back in 2001. With an innovative competitor like Mozilla gaining and another (Google) looming, however, Microsoft needed to make more sweeping changes. After complaints from customers that it was being too coy, the company finally started talking about the browser as the year began.

The new browser has stronger compliance with web standards, which overjoys Web developers but could break many old corporate Web apps or sub-standard Web sites, so Microsoft put in what it calls "compatibility mode" to handle sub-standard sites. It's also got improved security, usability and manageability, and is said to be more IT-friendly.

10. The SharePoint Phenomenon

SharePoint, Microsoft's content management, collaboration and Web publishing platform, continued its meteoric rise in 2008, becoming a $1 billion product. Microsoft dropped few hints about where it would go next with the software, but did release a software-as-a-service version and bought search technology to gird what's already in SharePoint.

Third-party software vendors rushed to support, govern, integrate with and extend SharePoint this year, while more and more customers (Wachovia, Monsanto, Coca-Cola Enterprises, among others ) came out of the woodwork to talk about their experiences. Meanwhile, competitors large and small angled to compete.

SharePoint is surely all the rage, but it may yet be a victim of its own success. Often, companies rush to install it without asking if it's really the right thing for them. With collaboration and content management as key initiatives for a while to come, though, many companies will continue finding room for more SharePoint.