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Rethinking System 7

Microsoft is in the midst of rolling out System 7, the newest generation of
Windows operating system. The company is betting much on the success of this
system, particularly after the lukewarm reception it received to Vista. What’s
more, System 7 is seen as the base of future generations for the software —
leaner, more secure, more capable and easier to use.

For enterprise-level organizations, System 7 is everything they could ask
for — a bridge between the more functional Windows XP and the system corporations
want and need.

For the rest of us, System 7 is a nightmare. Not because it is a bad system.
Not because it is a resource pig that will need upwards of 16GB of RAM to run
well. But because Microsoft’s marketing departments just aren’t
doing their job.

The company that built its reputation on savvy marketing and out-maneuvering
competitors would rate no more than a C-minus for its efforts. Sure, the company
does a great job of promotion, and has its distribution networks in place and
functioning. But marketing is a blend of four elements — product, price,
promotion and distribution. If the “mix” of these four elements
is wrong, it doesn’t matter how good the product is. And Microsoft has
the wrong mix.

Here’s what I mean:

  • The product has too many versions. As of release time, there are six different
    versions that include Windows 7 Starter, Windows 7 Home Premium, Windows 7
    Professional, Windows 7 Enterprise, and Windows 7 Ultimate. Windows 7 Home
    Basic will also be sold, but only to emerging markets. A seventh will be added
    for European customers. Even if you can figure out which of these to buy,
    nearly all will come in both 32-bit and 64-bit configurations. Awk!
  • The Windows product names are alphabet soup. We’ve noted before the
    goofy ways in which Microsoft confuses consumers by using the same name for
    different products. Explorer, for example, being the name of both your file
    system manager and web browser. With Windows, the problem is that they can’t
    use a consistent naming scheme. It was Windows 1, 2, 2.1, 3, and finally 3.11.
    Then, it leapt to Windows 95 and 98, followed by the incredibly forgettable
    Windows ME, then back to years with Windows 2000. And then, the went back
    to the alphabet again for Windows NT and XP, followed by the art department
    deciding to express themselves and call it Windows Vista. And now, we see
    a new naming scheme, Windows 7. Surely there is a better way.
  • The product costs too much. Sticking it to your customer base is hardly
    a way to build customer loyalty, and by keeping the price of each new system
    so high (Windows 7 will carry an upgrade price of more than $200, while the
    competitive Mac OSX 10.6 “Snow Leopard” will sport an upgrade
    price of $29). All that this pricing strategy has done is to push more consumers,
    including small businesses, to software piracy in an effort to keep using
    Microsoft products and stay current. This has then forced Microsoft to resort
    to increasingly bizarre and draconian efforts to stop piracy that end up punishing
    users who have actually paid for their software.
  • This pricing strategy cripples product distribution. If Windows 7 follows
    the standard Microsoft pricing strategy, it will offer the initial product
    at an astronomical price, and then drop the price over time according to how
    sales are going, how the product is received, etc. This strategy trains consumers
    not to use the system when it is first released (surely not what the company
    intends). In fact, the mantra for Windows operating systems is now to wait
    until the first service pack is released. Microsoft’s product pricing
    strategy therefore encourages customers to help drive up the distribution
    costs by forcing Microsoft to essentially scrap the first generation of its
    products in order to replace them with new products that incorporate the service

The danger for any company of the stature of Microsoft is that it begins to
believe its own press releases. Far from being the marketing wizard it once
was, the company appears to be sitting on its marketing laurels, doing things
the way they have done them in the past with no real understanding of how the
marketplace has changed in the past 25 years.

They will change, eventually, as new blood comes to the company or sales continue
to decline. But that’s not what we want from Microsoft, and that is not
what will best serve accountants who use its products.


A compendium of ideas, products, rants and raves from the viewpoint of
the author.
The author has no financial interests in any of the products mentioned.
Feel free to
disagree, or to share your ideas by sending them to

Internet Site of the Month:

We Scots have the reputation for frugality, and I am no exception.
I like this site because it carries quality new, refurb and overstock
technology stuff at some of the best prices on the web. Check out
is “bargain countdown” section, as well, for special

User Discussion Groups. In a world grown fractious
and polarized, it is nice to find civil places where people politely share
knowledge and ideas. These are the forums, which I use extensively to
learn more about accounting, technology and products I use. I belong to
discussion forums for my Goldwing cycle, DirecTV, BlackBerry cell phone
and computing tech support. And I visit them almost daily.

Broadband Stimulus Dollars.
I noted last month that there was
almost no way that this program would truly stimulate jobs to pull us
out of recession. Now the schedule has bogged down, the rules are changing
almost daily, and the inspector general of the Department of Commerce
is stepping in to investigate the whole mess. Anyone still want the federal
government to run a National Broadband Plan?

YouTube Rippers.
I got dragged kicking and screaming to YouTube,
a service that has no clear business model, is burning through money faster
than an ex-spouse, and has a lot of dubious content. But I do find it
of value to sometimes take a snippet here or there for personal review
at a later date, and for this there are a wide range of websites and software
solutions that allow you to convert YouTube videos (called ripping the
videos) and store them. What remains to be seen, when the courts finally
rule in on this, is whether it will be deemed legal.

Advertising on Twitter.
Okay, let’s go over this again.
Really cool Internet services that have no business model must eventually
turn to one of two models to survive — they will either sell your
personal information to marketers or inundate you with advertising. Twitter
is the latest to announce it has changed its terms of service agreement
to enable advertisers to target its users directly. Prediction: Facebook
is next.

Windows 7.
While I have blasted Microsoft’s increasingly
inept marketing efforts for the Windows franchise, this operating system
is easily the best since Windows XP. Smaller, better, more secure and
with some interesting new features, I’m betting that most accounting
firms will want to make the upgrade … after the first Service Pack,
of course.


See inside October 2009 issue

Keeping Up With User Policies (Part II of II)

Column: Tricks & Tips