Vista delay is back to the future for Redmond

That's my G-rated reaction to Microsoft's stunning announcement that it won't ship the already-delayed consumer version of its Vista operating system. As company honchos gathered throughout Silicon Valley on Tuesday to mull over what this will mean to their futures, it's safe to assume their expressions were a bit more pungent.

Once the shock wears off, executives are sure to have very frank discussions with their counterparts in Redmond. It's been quite some time since the computer business had a wow product it could rally around and offer to customers as an incentive to upgrade. These folks were counting on Vista.

In Microsoft's view, this is simply a decision to delay the ship date by a few weeks. But it's much more.

Time was when Microsoft could get away with a product slip, shrug its shoulders and promise a "new and improved" version sometime soon.

Microsoft's OEMs (original equipment manufacturers) were banking on a big bang rollout in the fourth quarter. This extends throughout the PC food chain--from chipmakers to storage providers to applications developers and yes, computer manufacturers.

The new launch is now scheduled for January 2007. Microsoft is downplaying the slip, saying the extra time was needed to build better security into the product. That may be so, but this is Microsoft's biggest product launch in years. Considering the amount of resources being thrown at the Vista project, Microsoft Chairman Bill Gates and CEO Steve Ballmer now face unyielding embarrassment. How could things go so wrong this late in the process? For years, Microsoft fought to shed a reputation for being perennially late shipping big projects like Windows and Windows NT. Tuesday's announcement only makes those questions front and center again.

Microsoft is downplaying suggestions that Tuesday's news suggests anything fundamentally wrong with the company's internal processes. Still, you have to ask whether the company has grown so large that its ability to undertake a project this complex is inevitably going to be hampered by its own bureaucratic sloth.

Last time I was on the Redmond campus, I spoke with an engineer in Microsoft's labs. He was especially proud of a photo-filing feature his team had developed. The problem: Microsoft wouldn't be able to incorporate the functionality into the operating system until Vista (then called Longhorn) and that launch was then still two years away. And all the while that Microsoft meandered, Apple Computer had already developed technology that did much the same thing.

Recall that last year Microsoft dropped several important features in order to not slow down the shipment plans. Microsoft even removed WinFS, a key piece of Longhorn, so that PC makers could plan around a holiday release.

As with everything it does, Microsoft is careful to cultivate its public relations. Earlier in the day, the company announced it would increase the distribution of its Xbox 360 video game consoles. But that bit of good news will get overshadowed because Vista will miss the entire '06 holiday shopping season.

Beyond the obvious blow to its reputation, Microsoft's inability to tame Windows--always a notoriously hairy coding project--puts the company on the defensive at the worst possible juncture. Time was when Microsoft could get away with a product slip, shrug its shoulders and promise a "new and improved" version sometime soon. But that was pre-Internet, pre-Linux and pre-Google; 2006 is not 1996, and Microsoft's customers have other alternatives.