The hard lessons of Vista

...of Windows, as opposed to the core operating system code. Gates talked on Monday of the need, for example, to update Internet Explorer more often.

But Cherry said it's more than just a different approach that is needed.

The analyst said that Microsoft needs to have a clearer set of features in mind when it designs a new version of Windows. It also needs to be able to assess what can be done in a particular time frame "and then be ruthless about staying on schedule," he said.

That discipline has been lacking at the Windows unit, Cherry said. "They've never met a feature they didn't like."

Changes on that front may be coming sooner rather than later. Sources say that Microsoft plans to tap Office boss Steven Sinofsky to head Windows development, reporting to Kevin Johnson, president of the platform products and services unit.

The Office unit has a proven track record of delivering new versions of its software suite on a much steadier basis.

Ballmer has made it clear that he wants an end to the days when all new product updates are "big bang" releases.

"The key is to make sure that for every line of business, we have the things that pop every six or nine months, pop every couple of years, pop longer than that," Ballmer said at a Gartner IT conference last year.

But Microsoft faces a tough challenge in deciding how much of the OS to change with each release.

"If they add too little, people don't find it compelling, and if they change too much, businesses can't absorb [the new software], even if they do get it out the door," Silver said. "This is the 'damned if you do, and damned if you don't' situation that Microsoft finds itself in."

Looking to Windows Live
Recognising that it can't update its operating system or major software every few months, and that many businesses wouldn't want such a thing, Microsoft has been increasingly looking to online services, such as its Office Live and Windows Live products, as a way to augment and refresh its desktop software.

But that only works to a point, Silver said.

"Services are great, and they will appeal to some segment of the market," he said. However, he added, "There are some things that really should be part of the OS."

One option, Silver said, is for Microsoft to go back to an earlier approach, in which it had separate releases for business users and consumers. Only with Windows XP did Microsoft finally bring them together.

"Eventually, they will need to do consumer releases more often," Silver said. "They don't need to do enterprise releases as often, but they need to be predictable."

The Windows Server unit, under Bob Muglia, has been working toward a schedule that would see major releases every four years and interim releases every two years. Microsoft released Windows Server 2003 three years ago and last year shipped Windows Server 2003 R2, a relatively modest upgrade.

Of course, the Windows Server group is inextricably linked to advances in the core operating system, so any delays there are likely to spill over. And history has shown that an even longer testing period is needed for server operating system upgrades.

The company has been slated to release the server version of Longhorn next year, an effort that Microsoft said yesterday remains on track.

As for the lumbering-giant issue, IBM did manage to remain a pretty significant force. After all, it's still Microsoft's number one competitor, Ballmer says.