Memo to Steve Ballmer for the long flight home

The rumors about Windows Vista apparently are true. People hate it.

Hey Jerry, you think Solozzo's tough?

Even with a cast of thousands and a sky-high budget, Vista's achieved more notoriety as a punch line for Apple's searing Mac-PC television spoofs than as IT's savior. And now The Wall Street Journal's Ben Worthen has put pencil to paper to correctly note that you've got a "Vista problem."

It's hard to draw a definitive conclusion because of the deferred revenue last year. At the time, Microsoft said that the $1.67 billion came from advance sales of Vista and the new version of Office, but didn't break it down further. If we take away the $1.67 billion, revenue for the two divisions combined only grew 4 percent.

To put that in perspective, PC sales grew somewhere around 12 percent to 14 percent over the same period depending on whose numbers you use. The sales that these divisions did make came at a high price: Even if we attribute all of the $1.14 income boost Microsoft deferred last year to the Windows division, income only grew 1 percent year-on-year. Between the two divisions, profits dropped 4 percent once the deferral is accounted for, meaning that it cost Microsoft more to sell the products this year.

But before you slam another bag of peanuts into your forehead, there's a good-news scenario you can consider.

Yahoo's born-again commitment to openness becomes a lot more interesting in light of what Microsoft is doing with its Live Developer Environment as well as Live Mesh. At the Web 2.0 conference, the company's Ari Balogh said the plan is to unify all profiles throughout Yahoo to create a single social Web-service API. The goal is to offer a common interface across Yahoo's invitation, presence, social-messaging and other services. How will that mesh (pardon the pun) with Microsoft? Beats me but you're both talking about platforms and services and openness. Ray Ozzie should be able to figure out how to make that work to common advantage.

Yahoo's got until Saturday to accept your original buyout bid, but why be a putz about it? Everyone knows Jerry Yang's toast if he decides to go it alone. If Google keeps racking up $5 billion quarters, you're not in such great shape either. I can predict what will happen, courtesy of The Godfather. (Isn't everything like The Godfather?)

The Corleones (that's Microsoft) have the desktop operating system and that's still a great franchise--until now. Not only is Vista a dog but search is undeniably the future. Has mankind invented a more efficient business idea than search-based advertising? So think of Eric Schmidt as Barzini. With the kind of money Google's printing each quarter, how long before it buys whatever's still needed to come after you in a big way? And I'm talking about stuff that will pose bigger headaches than just Google Docs.

So do yourself a favor and get Brad Smith on the line when you hit the tarmac. You can extend this bid a little while extra. You're doing a good job making Yahoo sweat but there's no reason to be precipitate. Besides, it's great fodder on the cocktail party circuit.

To quote Sonny, "Well, what's your answer gonna be, Pop, er, Steve?"