Windows takes beating, ‘7’ steps into view

By Ina Fried From CNET News

Probably the biggest deal of 2008 for Microsoft was the deal that didn’t happen–its multibillion-dollar offer for Yahoo. But, since there was so much drama there, we did a separate “year in review” story on that topic.

Even setting Microhoo aside, it was a big year for the world’s largest software maker. The most visible change at the company came at the end of June, when Bill Gates completed his planned transition from full-time software chief to part-time employee and full-time philanthropist. Although he didn’t do a full-on farewell tour, he did acknowledge the impending shift, most memorably in a speech at January’s Consumer Electronics Show.

Windows XP reached the end of its life in June, but some consumers–and therefore computer makers–weren’t ready to see it go. Eager to fill demand for the soon-to-be retired operating system, PC makers got creative and started selling Vista machines that were pre-downgraded to XP.

The company struggled all year with continuing negative perceptions of Vista. After letting Apple lead a chorus of Vista-bashing for some time, Microsoft decided to take to the airwaves itself. Its first effort was a series of dubiously funny ads with Jerry Seinfeld and Bill Gates, which quickly gave way to the “I’m a PC” campaign.

Microsoft, meanwhile, was hard at work on Vista’s successor, Windows 7. The company broke the silence in May with Windows chief Steven Sinofsky offering a few details in an interview and Microsoft showing the operating system’s multitouch interface at the D: All Things Digital conference.

At its Professional Developers Conference in October, Microsoft gave a more detailed look at Windows 7 and also took the wraps off Windows Azure, the OS-in-the-cloud that Ray Ozzie and team have been cooking up for the past two years.

On the Office side of the business, the biggest news was the fact that Microsoft plans to finally offer Web-based versions of Word, PowerPoint, Excel, and OneNote.

Microsoft wasn’t immune to the slowdown, acknowledging in November that it was rethinking its hiring plans. CEO Steve Ballmer later said that hiring would slow down significantly from the company’s original plans.

The company did make a couple of key hires, including the December announcement that Qi Lu, a former top Yahoo search executive, will become the new online chief. He fills the hole created when Kevin Johnson left the company in June to become CEO of Juniper Networks. With Lu getting the top spot, however, former Aquantive CEO Brian McAndrews will be leaving Microsoft.

Also departing this year was longtime executive Jeff Raikes, who left to become CEO of the Bill and Melinda Gates Foundation. Earlier in the year, three other executives left the company, including former CEO Steve Berkowitz.

As usual, Microsoft made some acquisitions, scooping up natural-language search firm Powerset, consumer smartphone maker Danger, and Norway’s Fast Search & Transfer.

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