At the root of Microsoft's problems is its financial structure. Leveraged by stock options and other financial tricks (R7), it depends heavily on rapid revenue growth and increasing stock value. When you've saturated your market (over 90%), and that market is stagnant, rapid revenue growth becomes difficult. Should future growth look poor, holders of stock options are likely to cash out, and much of that $43 Billion evaporates.

By necessity, Microsoft must expand into new markets. Problem is, they've never been particularly successful in entering any markets where they could not leverage their monopolies. As is true of other monopolies, they simply aren't competitive in open markets. While Windows has a profit margin of 85%, and Microsoft Office has a margin of 79%, every other Microsoft division is losing money in reams (R4).

... The very disappointing uptake of Windows XP has convinced Microsoft they must force upgrades. License 6 does force customers to upgrade on Microsoft's schedule, whether they want to or not, but a majority of the market has not adopted License 6, despite Microsoft's threats. Clearly drastic changes are needed to Windows to generate renewed upgrade revenue. ...

The Longhorn filesystem will be based on the technology of a re-thought and expanded SQL Server database (the project coded Yukon) ... Current Windows based software will not be compatible with the Longhorn filesystem. Microsoft has already stated that all their own software has to be rewritten for it - so will everyone else's. This will eliminate a huge number of software titles which are useful, but not sufficiently profitable to justify rewriting them. ...

Coming with Longhorn is a new user interface, code named Sideshow (W5), so if you're currently trying to make sense of the new Windows XP user interface, 2005 is when Billy intends to yank your chain again. If you're a Windows programmer, you get to learn a new API framework named Avalon (W6) too.

For me, the most interesting thing about video games is taking the controller and using it to move something around on the screen. - [legendary Nintendo designer] Shigeru Miyamoto