Intelligent Enterprise

Microsoft posted record revenue of $60 billion in 2008 and a hefty $17.5 billion profit. It's still the dominant player in most major software markets and its OS runs 9 out of 10 PCs. So things are rosy in Redmond, right?

Wrong. The solid numbers belie serious cracks that are emerging in Microsoft's core franchises. Windows sales and market share, though robust, are in decline. The company's efforts to expand into new markets are floundering, and key executives are jumping ship. With that in mind, here's a list of ten urgent tasks that Steve Ballmer and company must undertake in 2009, lest those cracks become craters.

Windows 7 screen shot.
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1. Release Windows 7
Microsoft needs to push its next operating system out the door as soon as possible, if only to erase Windows Vista's stench from the computing landscape with maximum expedience. Thanks in large part to Vista's unpopularity, Windows' share of the OS market has fallen just below 90% for the first time in recent memory as frustrated users turn to Macs and even Linux machines.

Vista was too expensive, too big and too bulky for most, and it offered little, if any, improvement over Windows XP.

It's imperative, therefore, that Microsoft get Windows 7 -- which early reports suggest is slimmer and more agile than its predecessor -- into the market in late 2009, and not early 2010 as Microsoft originally planned. Most consumers put off new PC purchases in 2008 due to the recession, but should be looking to upgrade during the 2009holiday season. It's crucial that Microsoft and partners have Windows 7 PCs on store shelves no later than Thanksgiving or they will miss the boat. The last thing anybody wants is a "Windows 7 Capable" program.

2. Introduce A Netbook

Everex Cloudbook

Netbooks are all the rage. Sure, these low-cost PCs won't let you to play Call of Duty 4 with the graphics maxed out, but they're great for anyone who just needs access to the Web and reliable e-mail. Microsoft's problem: Netbooks are the fastest growing hardware form factor, and Windows doesn't fit on them. That fact was partly to blame for Windows sales growth of just 2% in Microsoft's fiscal first quarter, despite the fact that the overall PC industry grew 10% to 12%.

Microsoft should partner with a hardware company and introduce a tightly integrated, sub $300 system running on a pared down, purpose-built version of Windows (something between full-blown Windows and Windows Mobile). With Apple reportedly set to introduce a netbook at Macworld in January, and with offshore vendors like Everex successfully hawking Linux-based variants at discounters such as Wal-Mart, Microsoft needs to get in on the action fast or get left behind.