When I was in Seattle last week, I had dinner with one of the folks on the Longhorn team and one of the things that we were discussing was the drivers that could create success for Longhorn. I’ve been thinking about this for a while now and am starting to come up with some of the answers. First, let’s take a look at the strategies that Microsoft uses to drive technology initiatives forward.

There are three main technology or product integration strategies employed by Microsoft. The first is a market share builder and is intended to build share for a new product that has no real share at the moment. Microsoft integrates the product into its operating system and the product now gains the distribution strength of the OS. Market share is built, but Microsoft must still work to assure that organizations and individuals actually u use the product. Microsoft must also forego the ability to charge a separate license fee for the software. In the past, Microsoft has successfully used this strategy for products such as Internet Explorer, Windows Media and MSN Messenger. The second strategy is an upgrade motivator and the goal is to provide incentives to users who purchase upgrades. Microsoft integrates new features and products into existing bundles as a motivator to drive sales. Though some users feel compelled to upgrade, new features or not, the new additions raise customer satisfaction and offer incentive to upgrade earlier. This is typically the strategy behind Office upgrades, sometimes meeting with limited success. In practice, this is less of a trend. When Microsoft released Office 2000, one the hallmarks of the upgrade was an application called PhotoDraw (that has long since disappeared). When Office 2003 shipped, Microsoft decided NOT to bundle the innovative OneNote program and rather sells that program as a separate SKU. Thirdly, Microsoft integrates new features to gain competitive advantage building Competitive Critical Mass. When a product is not doing well against competition Microsoft will keep adding features until buyers are compelled to view it as a great “value.” Microsoft’s efforts in mobility clearly fall into this space as products like Windows CE, Palm Sized PC, Pocket PC, Smartphone all continue to be revised as Microsoft attempts to gain a stronger presence in this space.

The problem is that none of these apply well to Longhorn. There are no features to integrate or products that lend themselves readily tied into the OS. In addition, by the time Longhorn ships, many organizations and individuals will have migrated to XP in some flavor and discover that XP’s features cross the threshold of what’s “good enough”.  In the past, there has been another way to get users to upgrade. Make changes to technology that force users to adopt new products against their wishes in order to stay compatible in terms of features or support. For example, the last time that Office file formats changed and were no longer compatible with prior versions, there was a wave of upgrades but also the wails of unhappy users who needed to upgrade to take advantage of this new “feature”. This is not a tactic that Microsoft will likely employ with Longhorn (cutting the XP support cycle, for example).  So I’m struggling with where the benefits and gains are. If users don’t start to understand the benefits of Longhorn in 2004 and what they will gain, really gain from upgrading, then the OS team in Redmond will begin to echo the old Pogo cartoon and the enemy they meet will be themselves when it comes time to get users to upgrade.