Q&A: Windows boss weighs in on version 7 plans

LAS VEGAS - Bill Veghte may not be as well known as his boss at Microsoft, Steve Ballmer. But as the head of the company's Windows business, Veghte is one of the key executives to the future of the company.

At the Consumer Electronics Show here Wednesday, Veghte sat with CNET News senior writer Ina Fried for a wide-ranging interview, touching on everything from the planned release of Windows 7 to future of Microsoft's gee-whiz touch technology. The following is a condensed and edited version of that interview:

Q: It's fair to say that you guys would like to have Windows 7 out in time for the holidays?
Veghte: We will ship it when the quality is right, and earlier is always better, but not at the cost of (ecosystem support), and not at the cost of quality.

In the past, one of the tools that Microsoft and other companies used to help manage that transition is some sort of technology guarantee: if you buy Vista after this point, you'll get 7 for free. My understanding is that you guys are planning something similar with 7?
Veghte: Certainly we want to make sure that Windows customers have an easy transition to Windows 7, and over the years we've provided a variety of offerings to customers...guarantee is one of them. And while we have nothing to announce today, we're certainly evaluating the options to make sure that we can help and support our customers in that transition.

One of the things with Windows 7, some of the cool features, particularly multitouch, require the hardware makers to build hardware that has the necessary things to take advantage of that. What is Microsoft doing to make sure that it's more than just a couple showcase machines that have touch?
Veghte: One of the things that we've worked very hard on in this release is engaging with the hardware vendors, taking their feedback, highlighting those opportunities, and then in the high quality releases doing deep engineering cooperation across the organization. Michael Dell, for example, went on record saying Dell worked with Microsoft for many, many years many releases of Windows, and this is one of the best, deepest cooperations that we've ever had...The beta is a big milestone, because we sort of unveil a lot of the capabilities that were not there in the developer release.

Do you have a goal in terms of how many people you want to try out this beta?
Veghte: Traditionally several million people is a good number. Several million means you can take all the feedback. It's important that as people are thinking about whether they download the beta, they actually use it (and share) that information with us. But if we have a couple million active beta testers, then we're going to be in great shape. This release is all about listening to customers, and we certainly have features and capabilities that you're familiar with, and now in the beta, a couple million people banging on it over the next couple of months.

What is the consumer pitch for Windows 7?
Veghte: You know, I get really excited about Windows 7 for a couple of different reasons. One is that it takes a set of everyday tasks that I do all the time, and it makes them faster and simpler. The second reason that I get excited about Windows 7 is there's a set of things that I expect my computer to do the way I want it to do, whether it be around reliability or security or battery life or performance or (controlling) messages popping up. And in Windows 7 on each one of those dimensions there's a set of improvements that we hope to deliver.

The next piece is in every release of Windows you have the opportunity to enable a set of scenarios or capabilities that are not (well-served now)...Like by providing touch support in Windows, whether you're a (third-party developer) or a hardware developer, you'll think about, "Do I touch-enable my notebook or do I touch-enable my application?" That's going to enable a whole set of new capabilities and interaction models for people.

Since we're at the Consumer Electronics Show here, the number of -- the amount of music, photos and video that is increasingly in my household, my PC, my wife's PC, you know, it's all over the place, and I just want one library one library of all of the Veghte photos or all the Veghte music. I don't really care about the physical location. And in Windows 7 we've taken that, through the combination of the new explorer, the PlayTo capabilities, the library construct, and made it much easier for people to manage, store, share their digital content.

The popular sentiment, or what I've heard most often from people who have played with 7, is this is Vista done right. What's your reaction to that?
Veghte: The next release is always (going to be better) and that's called innovation. And so we've got to satisfy a set of customers in Windows Vista now, we've got people announcing exciting new license numbers in terms of the continued growth of Windows Vista, but the investments in the innovation that we did in Windows Vista architecturally are enabling a set of capabilities that we couldn't do.

Many businesses have not jumped to Vista. What's the business message going to be around 7?
Veghte: When I think about the conversations with business customers, they want not only things that we do for end users, but they want great manageability and security. And clearly two years after the delivery of Windows Vista, we've demonstrated a higher degree of manageability and security.

Is it disappointing that it hasn't translated better?
Veghte: No, but in some fashion -- that's why I look at it and say, from a marketing perspective we did make that statement. We said Windows Vista is the most secure desktop OS release we've ever done. By virtue of the release of Windows Vista, we were going to have lots and lots of people going after it. And under that, Windows Vista has stood up very, very strongly... When I think about the conversation with CIOs or with businesses, in this era, this modern desktop era, you want security, you want manageability at a different level than you want it in 1999. And as such, Windows Vista meets that bar and Windows 7 builds on it...And we have to protect the investments that customers are making today in Windows Vista.

Have you changed your marketing approach because of the economy?
Veghte: Can I broaden the question a little bit? When you think about the economic situation, what does that mean to the Windows?

Sure.
Veghte: Windows PCs have always represented a great value relative to other companies in the marketplace, both in terms of the whole range of price points and all the capabilities that you get out of the box.

Given the economic situation, as shareholders would expect us to tighten our belt, but with the things that are most important, and customers would expect us to do that while continuing to innovate. And this is why even in this touch economic situation it's exciting to be able to look at the product pipeline we've got with Internet Explorer 8, Windows 7 and Windows Live...and the next generation of Windows Live, and look at all of the advances that we're offering to customers. A Windows PC is an unbelievable entertainment investment.

It's reasonable to think though that you guys might be spending less on ads and other marketing.
Veghte: The expectation is that the dollars we spend on advertising today will go further than it did (before). But the Windows business is pretty core to Microsoft, it's core to the Microsoft brand, so we will continue to invest in support of Windows.

Do you think the same holds true when we look at things like headcount?
Veghte: Windows is core to the success of the company. I'm certainly looking at how we can be more efficient, and given the mission in our advertising spending that we just talked about, efficient in where we apply our headcount and efficient, but not at the risk of jeopardizing the opportunity that we have, and the opportunity in these economic conditions.

Do you think Microsoft will have do more than you have in the past in terms of reacting to the economy?
Veghte: I think certainly Bill's philosophy and Steve's philosophy has been to take a long term view. The long term view is (stick with) the investments we make in R&D, and then patiently and steadily and tenaciously deliver on that opportunity.

Obviously a lot of the marketing that you guys rolled out as part of the new ad campaign is pretty deliberately trying to say this is what Windows is, and really this is what Windows is vis-à-vis Apple. Where do you see the competitive landscape having shifted from where it was say a few months ago?
Veghte: In the fall we did two things: One is we were clear on what Windows represents... to be clear on what Windows stood for, and give people, Windows customers the opportunity to be proud of who and what (they stand for) in rolling out the tag line, saying "I am a PC." Now, you can decide whether that's competitive context or not. I choose to sort of think about it as we need communicate what Windows stands for, and we need to give our customers the opportunity to celebrate who and what they've chosen.

Microsoft's history with Windows is taking things, concepts, technologies, and making them accessible to the average user. And your competitor, Apple, you know, typically gets a lot of credit for innovating. Are there things that Microsoft is doing in the desktop OS that you believe you aren't getting credit for?
Veghte: I think the important thing for us is making sure that we're serving our customers well. You look at how we've listened and the things that we've picked up on and delivered in Windows 7 or Windows Live Wave 3 or Internet Explorer 8, it's I think a set of everyday tasks, that's huge innovation. I think it's huge innovation when you realize that on average over a third of the time people have four or more windows open. If I can dramatically simplify that, that's innovation...And so when I look sort of against the backdrop of history and sort of the current economic landscape, I think we've got -- we have a tremendous value proposition to bring to market.