Vista is a Damn Disaster

From: Alec Saunders
Sent: August-29-07 9:54 AM
To: Steve Ballmer; Jeff Raikes; Steve Sinofsky

Subject: regarding Windows Vista

Steve, Jeff and Steve…

I am writing you both because I know you from my days at Microsoft from 1992 to 2001. And to put what I’m about to say in context, I have been a Windows PC user since Windows version 1.02, and my home is stuffed full of PC’s, networks and servers… all running Windows – XP, Vista, Home Server. I worked on the launches of MS-DOS 6, MS-DOS 6.2, Windows 3.1, WFW, NT 3.1, NT 3.51, Windows 95, Windows 98, Windows CE, Windows 98 SE, and Windows ME before leaving the company. I’m a self-professed geek and will willing put up with a lot of pain in order to have the latest technology as well.

Now that you have the context for who I am, I want to tell you that I am seriously losing faith. My experience with Windows Vista has been a rank disaster. At this point, I believe it to be worse than Windows 98, which many consider to be the worst quality Windows product that Microsoft ever released. Specifically:

1. Driver quality is low. The ATI graphics card I have installed in my PC regularly causes a spontaneous reboot. My HP scanner doesn’t have a supported driver anymore.

2. Partner software quality is even worse. For example, over the weekend I installed Sony’s software for the HDR-SR1 (their new high definition camcorder) and lived through a series of spontaneous reboots. On one PC I was able to do a system restore. On another, uninstall worked. However, at this point I am simply unable to retrieve or view video files from that Camera, as they are all recorded in the new AVCHD format.

3. The OS quality is also low. Subsystems sometimes stop working for no reason. The PC I have printers attached to simply decides not to print, periodically. Then the print spooler on all of the other Vista PC’s attached to it simply stops and has to be manually restarted.

4. Microsoft software hasn’t been fully tested on Vista either. I use Foldershare, quite a bit, which works intermittently. My Windows Live OneCare software sometimes works and sometimes not… on some PC’s and not others.

I could go on and on, but suffice it to say it’s no surprise to me that one of the top stories on Techmeme this morning is that one in six new laptops are Macbooks, and not Windows. I myself have seriously looked at abandoning my investment in Windows. My Macintosh owner friends encourage me to do so, and don’t seem to have the same kind of trials with PC’s that I do. They appear to be able to just open them, use them, and put them away. Parents I know are opting to buy their children Mac’s, apparently because it relieves them of the need to be IS manager for the home.

The driver, Microsoft software and OS quality issues are Microsoft’s alone. However, the partner quality issue is an evangelism and certification issue. It seems, from where I sit, that the evangelism effort that the Windows 95 launch team undertook was not matched by the Windows Vista launch team.

This issue impacts me daily. I spend at least an hour a day fixing PC problems, whether on my tablet PC in my office, or at home. I can’t continue this way, and if I can’t I would imagine a lot of other customers can’t either.

Regards,

Alec.

EarthLink: Except for Helio, New Course Set

Saying it has made no final decision about its Helio investment, EarthLink officials have made a few things clear. It simply won't proceed with municipal WiFi networks in Alexandria, Va.; San Francisco; Atlanta; Houston, St. Petersburg, Fla. and Arlington County, Va. unless the terms of those franchises are altered.

It will continue to operate or invest in the networks in Corpus Christi, Tex.; Philadelphia and Anaheim, Calif.

What EarthLink is looking for is risk sharing by other stakeholders, possibly including the municipal governments, chipmakers, network infrastructure vendors or other stakeholders who benefit from continued deployment of municipal WiFi networks. In other words, EarthLink simply won't build if it has to put up all the cash.

For those of you who wonder about the business case, EarthLink is voting with its own wallet: there isn't an adequate return when it has to build the network.

So far at least, EarthLink seems to have made no final decisions about its Helio wireless venture, either. The problem is that EarthLink already has invested more than $100 million into the joint venture with SK Telecom, and it will watch that investment go down the drain if it doesn't try to get it into gear.

At any rate, Helio does not seem to be "top of mind" for the EarthLink management team. That belongs to the business-focused networking business of its New Edge Networks division. Getting New Edge to profitability is job one.

Among the current problems: gross margin of just five percent and churn of 2.7 percent a month. Of those two problems the bigger issue is gross margin. Monthly churn of 2.7 percent, while not pleasant, isn't terribly unusual in the small and mid-sized business market. But five percent gross margin is not a business.

EarthLink also is cutting back its customer acquisition efforts, and doesn't necessarily think it will be a bigger company in the future, measured by subscriber count. Instead, it will focus on selling more products to its existing base of customers.

That doesn't preclude acquisition of customer bases that are stable. EarthLink always has been an acquirer of customer bases, so that's in keeping with its legacy. But after a careful analysis of its customer cohorts, it has found what just about every other company with a recurring services revenue model also should find.

And that is that most of a company's churn occurs very early in a customer relationship. A good chunk--perhaps as much as a third or more of total churn--occurs within a few months. Perhaps half of all churn happens in the first year. Get past that point and churn actually is pretty low.

So the municipal WiFi decision essentially is made. For the markets not yet built, get concessions or get out. Run the three networks already operational. With immediate attention focused on New Edge, and different customer management straegies in place for the consumer Internet access business, that just leaves Helio unresolved.

What EarthLink Didn't Say...

..in announcing a cut of 40 percent of its current workforce, a tactical move, was what it intends to do about a business strategy with no focus. And that was what EarthLink remains mum about. Helio and municipal Wi-Fi are bleeding cash; broadband is slowing and dial-up is dying.

One thing EarthLink did say is that gross subscriber additions will decelerate in 2008, in part because EarthLink will stop marketing to customer segments it believes likely to churn.

There's something else. The company expects fewer migrations from narrowband to broadband. Why? Because, industrywide, the pool of people using narrowband who want to upgrade to broadband is nearing exhaustion. And the number who see little value in owning and using PCs obviously won't be candidates for narrowband or broadband access.

We rapidly are approaching the point where the "problem" of broadband adoption is no longer a "problem" of access, but a problem of "demand." There just aren't that many more people who want broadband and can't get it. Which means the marketing battler will refocus, as it always does in saturated markets, on upselling more services and features and stealing market share from somebody else.

All things being equal, a facilities-based access platform typically beats a leased-access platform. But there's one more essential ingredient. There have to be customers. In the fixed broadband access market, we are running out of customers.

One Movie: You Blow Your Monthly Data Plan

Something's gotta give here: Akamai has rolled out a high definition television delivery service, capable of delivering a two-hour feature-length movie encoded at a bit rate of at least 6-8 Mbps, with a resultant file size of 5 Gbytes to 8 GB. For those of you with some popular wireless broadband accounts, that's pretty much your "acceptable use" level of monthly consumption of data! And that's just your problem.

Assume the same bit of content were delivered to enough households to create one Nielsen ratings point. That's 1,102,000 households. Which means the delivery networks would require 6.6 Terabits per second of sustained bandwidth, assuming zero latency and zero network congestion!

I don't care who you are, your pipes are getting to be too small. Local area network bandwidth at enterprises is growing smartly, but consumer bandwidth won't be far behind, if in fact consumer bandwidth does not soon eclipse enterprise bandwidth in at least the downstream direction.

One HDTV movie. Two hours. Your whole monthly acceptable use consumption. Obviously there's not enough bandwidth.

Another Glitch: Not Vonage's Fault

So here's a prediction: third quarter additons of a wide range of products ranging from cable modem to satellite TV to VoIP service will be lower than expected, or at the very least pushed towards the last month of the quarter, despite the normal lift provided by millions of college students returning to school. The reason? Not the economy, necessarily. Not a slowdown in new household formation. Not fewer college students returning to campuses.

Of all things, the slowdown will come from the perhaps unexpected shut down of a widely-used in-store-activation service supporting sales of Verizon, at&t, Comcast, Time Warner, Cox Communications, Time Warner, DirecTV, Clearwire, Covad, HughesNet and other major service provider retail sales efforts. Oh, and Vonage.

Boston-based GetConnected Inc., a maker of transaction processing platforms for broadband service providers,

abruptly closed its doors in mid-August, leaving Circuit City, Best Buy and Radio Shack without a way to do in-store

activations of Vonage accounts. With predictable results.

That doesn't mean customers can't activate, simply that they can't activate in the store. And in some cases, the hassle factor is high enough that retailers, such as Circuit City, have simply opted to stop selling products requiring in-store activation, such as Vonage. The problem, apparently, is that the in-store-activation process is the only way to get Vonage when sold by Circuit City. There is not after-market activation process to default to.

So Circuit City, for its part, has stopped selling Vonage, either in its retail locations or online.

GetConnected executives blamed an unexpected and "faster than usual" downturn in broadband sales. I'm not sure I buy that explanation. However, if true, it might suggest a broader slowdown in uptake of a wide range of consumer communications and entertainment services, as the company had worked for quite a roster of "Blue Chip" clients.

Those customers included Comcast, at&t, Verizon, DirecTV, Clearwire, Charter Communications, Covad, Cox Communications, HughesNet, Timewarner, Cox Communications . and Time Warner Cable.

Presumably the bankruptcy has had a similar effect on sales of Digita Subscriber Line, cable modem and DirecTV subscriptions in retail stores as well, though customer service and activation teams have more than a month to get the backlog cleared.

Most of the majors seem to also be partnered with Synchronoss Technologies for automated ordering of a variety of services including VoIP, mobility services, cable TV and wireline phone service. The big lift for Synchronoss is that it supplies activation for at&t iPhone sales. That's as much as 68 percent of total company revenue at the moment. With the demise of GetConnected, we'd expect more diversification of Synchronoss revenue streams.

Sametime, Not Same Thing

Watching Lotus Notes morph into something beyond email has been interesting. Rescued from irrelevance when IBM changed Notes into an open platform, Sametime now talks to Ajax, making Notes features compatible with all sorts of Web services and legacy telecom platforms as well (with the Siemens OpenScape deal).

That sets up an unexpected new round of combat in the collaboration space that Lotus lost to Microsoft Outlook some years ago. Only this time, the battle is centered around instant messaging, rather than email. Email is a key feature, to be sure. But IM is key, in part because presence features are getting to be so important.

So do companies in technology sometimes get a second chance? It would appear so. Look at Apple and Sametime.

Web 2.0 Corollary: Email as Content Context

With IBM Launching Sametime and Microsoft getting ready for its OCS launch, we might note a corollary to the trend that has communications being embedded within the context of applications and content. One trend has communications (voice, video or audio conferencing, text messaging, instant messaging, email) being embedded within enterprise applications or portals.

At the same time, stand-alone communications tools such as email are morphing as well. Where today email is a stand-alone communications tool on the desktop, it seems to be pushing in a new direction. It seems to be becoming a tool to coordinate communications or content from RSS feeds, blogs, wikis, IMs, and voice.

Instead of using a document attachment, email might simply point a user to a link that displays a page, a document, a news feed, a site or client where a piece of information or content resides, rather than leading a user away from the message.

Zimbra, for example, pops up other information that embedded in a message. Zimbra retrieves the information and pulls it into the email, instead of opening a link that takes the user someplace else.

So it might not make sense, someday, to separate out a user's "communication" activities from a user's "information" or "content" activities. One will communicate when using or accessing information or content, and use or retrieve information or content from a "communications" application.