Vista flaw could haunt Microsoft

(Business 2.0 Magazine) -- If you followed Microsoft in the 1990s, you knew it as a company that deftly moved from strength to strength, leveraging its dominance in one area of software to command other parts of the tech business.

That company's long gone, folks.

VISTA'S BLIND SPOT: The new Microsoft operating system has one glaring omission that could turn off corporate buyers.

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The latest evidence that Microsoft (Charts) has lost its Midas Touch? Its bid for a bigger piece of the $14 billion database business, a sector now ruled by Oracle (Charts) and IBM (Charts). Until now, Microsoft has been doing what it does best to attract corporate customers: It has tied its SQL Server database management software to programs running on Windows desktops.

But now Microsoft has a problem. Vista, its long-awaited update to the Windows operating system, can't run the current version of SQL Server. The company is working on a SQL upgrade that is compatible with Vista - called SQL Server 2005 Express Service Pack 2 - but it's in beta and can be licensed only for testing purposes. Microsoft hasn't set a release date for the new SQL program.

So companies looking to install Vista, which went on sale to corporate customers Nov. 30, are going to have to get their database management software someplace else.

Microsoft has effectively just handed its chief rivals an early holiday present. (Before any more of you fire off an outraged e-mail informing me that Vista doesn't run SQL Server, go back and read the above paragraphs again: I'm talking about SQL Server 2005 Express, which is the desktop counterpart of SQL Server - not the server version.)

This, of course, is exactly the opposite of what Microsoft should be doing if it hopes to outsell Oracle and IBM in the database business. Microsoft should have released a Vista-compatible version of SQL Server as early as a year ago. That way, corporate customers would have had plenty of time to test it in time for Vista's release.

Instead, IBM has beaten Microsoft to the punch. Last week IBM released a desktop version of its competing database management software, called DB2 9 Express-C, that's compatible with Vista.

Microsoft's oversight with SQL is one reason, among many, why analysts don't expect Vista to appear in the workplace until 2008. And it's become yet another sticking point with corporate IT departments already frustrated by their dependence on Microsoft. In the long run, the lack of SQL support could delay widespread adoption of Vista even further.

Microsoft's long had a strategy to be everywhere computers are - from home desktops to office servers. And it's had some success: One reason why programmers of database-driven applications use SQL Server is because it comes with a component called Microsoft Desktop Engine, or MSDE. (While you may not have heard of MSDE, it's an exceedingly common software component - so common, in fact, that it played a starring role in the spread of the infamous Slammer worm four years ago.)

Granted, not everyone uses MSDE inside other applications; many database developers simply use it to test their SQL Server setup. For these programmers, Microsoft's delay won't make much of a difference.

But for many companies with MSDE-based applications - mostly small enterprises without a large IT staff to manage system upgrades - headaches loom. First they must upgrade to the currently available version of SQL Server 2005 Express, which doesn't run on Vista, and test it on their Windows XP desktops. Once Microsoft rolls out a Vista-compatible version of that software, they'll need to upgrade and test all over again.

So what can companies that adopt Vista do now? Not a whole lot.

They can download the test version of SQL Server and start preparing their database applications for an upgrade, says Chris Alliegro, an analyst at Directions on Microsoft. But even that step won't be easy.

"It's not ideal, and it's a pain in the neck," says Alliegro. Before company programmers start testing SQL's beta, they'll have to identify all of the database applications they're running that rely on MSDE.

For companies that have acquired other businesses, reorganized divisions, or outsourced IT personnel, that's a mighty tall order. And here's the rub: Until Microsoft releases a Vista-compatible version of SQL Server 2005, all that testing will be for naught, since they won't be able to install it on users' desktops.

So good luck trying to get approval from your company's budget cops. Just imagine the CFO grilling the CIO about a plan like that: "You want to spend money testing software that you can't run? And you don't know when you'll be able to run it?"

With database software for small and medium-sized businesses the fastest-growing segment of the market, Microsoft may well be alienating the sector it can least afford to lose in its campaign to boost database sales.

Microsoft, of course, will get SQL Server 2005 officially running on Vista. "Eventually, most companies who are running Windows will be running on SQL Server 2005," promises Alliegro.

The key word here is "eventually." Microsoft's customers waited five years for Vista. Now, they're discovering that they still have to wait for a database component that works with it.

No wonder Google (Charts) is beating Microsoft in other arenas: This is a company that has forgotten how to execute its own playbook of launching a coordinated wave of products that all work together.

No doubt Microsoft will get this straightened out - eventually. By then, it just might be time to launch another version of Windows.