What the World Needs Now: Microsoft's Not-So-Evil Empire

Is it possible that Microsoft is becoming admirable again? Or, at least, less despicable? Now that the tech industry and the U.S. economy are in the doldrums, the atmosphere seems to be lightening around the behemoth software maker that so many used to love to hate. If Microsoft makes money, so do a lot of other people.

For years, many techie types have considered Microsoft (Nasdaq: MSFT) an Evil Empire of consumer electronics, crushing competition and innovation and maintaining a reign of mediocrity.

That's why two years ago, mild-mannered Bill Gates was booed when he delivered a keynote address at the International Consumer Electronics Show in Las Vegas -- and why, earlier this year, a Hungarian student threw eggs at new Microsoft CEO Steve Ballmer.

For a long time, it's been cool to hate Microsoft and fun to root against it, but a combination of economic anxiety and good work by the corporate giant may be changing that.

Cheers for Windows 7

Wednesday, Intel (Nasdaq: INTC) sent shivers up the spines of industry types at CES by forecasting a massive 23 percent decline in profits for the fourth quarter of 2008 that can only mean many of its customers are in trouble.

That may have been part of the reason the less-than-charismatic Ballmer was given something close to a hero's welcome Wednesday night when he delivered an almost inspirational keynote address before a packed house at CES. He showed off the genuinely impressive new Microsoft Windows 7 operating system to oohs, ahs and more-than-polite applause.

In the past, there would have been a great deal of schadenfreude inside and outside the room if there had been a glitch in the keynote demonstration. This time, it's likely that few in the crowd would have delighted in an embarrassment.

"Windows 7 should boot more quickly, offer better battery life and have fewer alerts," Ballmer said. The new operating system will also provide a cool, ultra-interactive, intuitive user interface and allow PC makers to offer more touch-screen capabilities.

Microsoft badly needs a success after its bloated, sluggish, overly complicated Vista operating systemflopped -- and it seems to have produced one, based on the demonstration.

The public can now download a prerelease test version of Windows 7. The temporary "beta" program will expire in six months, and Windows 7 won't go on sale until late this year or early next.

Bright Cloud

This time, a lot of people will be rooting for Goliath, because the consumer electronics industry, and the American economy in particular, need things to start going right. Microsoft's growing array of partnerships with companies like Verizon Wireless and Facebook mean that if it makes lots of money, so will a lot of other people.

They used to say what was good for GM was good for America. Microsoft may have taken up that mantle.

"Today, our world and our industry face some really big challenges," Ballmer said. "As this recession ripples across the globe, it feels like we're entering a period of reduced expectations -- a time when we may be tempted to temper our optimism and scale back our ambitions. But no matter what happens with the economy or how long this recession lasts, I believe our digital lives will only continue to get richer. There is no turning back from the connected world and the pace of technological advancement bringing people closer together."

Ballmer said that even as economic storm clouds loomed, Microsoft invested US$8 billion in research and development last year -- and he said Microsoft will continue to spend big, no matter how bad the economy gets.

"I believe the companies and the industries that continue to pursue innovation will position themselves for growth far surpassing companies that pull back," Ballmer said. "At the end of the day, it's the power of innovation that drives us forward, regardless of the economic environment."

He said the potential to change people's lives with technology "has not diminished, and is in many ways today more powerful than ever before."

One example, he said, is the need to produce cheaper PCs to make the Internet more accessible to billions around the globe.

Ballmer also talked about the power of tying together the "three screens" in everyone's life: the TV, the phone and the PC. He talked about how "the cloud" -- a metaphor for such an Internet linking of various media -- will deliver content and services, particularly in terms of entertainment and social networking, via Windows. He said the deal Microsoft has with Facebook heralds the start of this trend.

"Microsoft is transforming what Windows is -- from a PC operating system to a connected platform and experience across the PC, the phone, the TV and the cloud."

It's a cloud that could bring some sunshine and warmth to a cold and gloomy economic night.