Microsoft hopes new software keeps lucrative business customers satisfied

AP Technology Writer

REDMOND, Wash. - Bill Hartnett got accustomed to the screaming. As Microsoft Corp.'s manager of software sales to financial services companies, Hartnett used to get pelted with complaints about the security and reliability of Microsoft's products.

Hartnett speaks openly about those dark days because he's sure they're well past. He and his colleagues contend the company is about to give businesses compelling reasons to not just tolerate Microsoft, but to be thrilled with it.

The occasion is the launch of crucial upgrades to Microsoft's most widely used and most profitable products. All at once, Microsoft is releasing a new Windows operating system, known as Vista; an update of the Office ''productivity'' package, which includes Word, Excel, Outlook and PowerPoint; and server software that handles behind-the-scenes functions.

The products will begin to be available for business users Nov. 30, with a consumer release of Windows and Office on Jan. 30.

Even in a less competitive world, the enormity of the launch would make this a crucial time for Microsoft. Vista has been delayed so long that it has been five years since the last overhaul of the operating system, which runs 90 percent of the world's personal computers. Office last got refreshed in 2003.

But the stakes are particularly high now. Savvy competitors using the Internet are challenging Microsoft's status as computing's vital plumbing provider. Meanwhile, Microsoft is spending some of the vast fortune it has amassed in desktop software to branch out with expensive splashes in video games and music players.

In other words, this is no time for Microsoft to deliver a dud in the core of its franchise. Next Thursday's corporate launch of Vista, Office and server software is being called ''A New Day For Business,'' meaning Microsoft's customers, but the phrase applies in Redmond just as well.

Microsoft executives claim that computer users who upgrade to Vista or Office, but especially both together, will be dazzled by how much more productive they can become. The company spent years studying how people use its most popular programs and retooled the user interface accordingly, trying to make it easier to find and use features.

It also worked to make its software sturdier than ever - less prone to crashes and less vulnerable to hackers. Because of that and new tools aimed at pleasing corporate technology staffs, Microsoft estimates the labor costs of supporting a machine running Vista will be $507 per PC a year, down from $542 with Windows XP.

Despite the improvements, many analysts don't expect corporate technology buyers to rush to buy PCs with Vista or Office 2007 upgrades. Surveys have found that fewer than half plan to adopt Vista in its first year of release.

That's largely because switching can be a complicated, costly process. Many organizations only recently upgraded to Office 2003.

And while Vista and Office may look better, a lot of the features are likely to be seen as nice-to-haves rather than must-haves.

''If you look at Vista, you say, 'What's the killer app?''' said Forrester Research analyst Ted Schadler. ''Somebody else will build a killer app on it, but until you get a killer app, you don't see the power of the platform.''

His Forrester colleague Kyle McNabb, who tracks business computing, believes the most powerful new item from Microsoft won't be something PC users can see. It's Microsoft's server software - particularly the Sharepoint document-management service - that McNabb believes has been best reshaped.

This is no small matter. Together, Sharepoint, the Exchange e-mail offering and Office software rang up $14.5 billion of Redmond's $44.3 billion in revenue in the last fiscal year, which ended June 30. That exceeded Windows sales of $13.2 billion.

These segments are so profitable - that combined $27.7 billion from business software and Windows sales produced $19.9 billion in operating income - that they all but float the company, letting Microsoft's entertainment and online divisions lose money.