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The most interesting of these is the fact that one of the largest challenges Redmond will face in 2007 and beyond is convincing its large, and growing, installed base to upgrade to this new wave of products.

I spoke to three analysts about their predictions for the year, what they saw as Microsoft's biggest challenges going forward, and the greatest threats to its business. This is what they had to say:

Al Gillen, vice president of research at IDC

Predictions:

(1) Consumer sales and shipments will shift to Vista immediately; enterprise adoption will lag.

(2) Customers will evaluate Office 2007 independently of Vista, so any broad movement to Office 2007 is likely to be dampened by the slow adoption of the new operating system.

(3) 2007 will not just be a year of purely selling new products, since Windows Longhorn Server still has to launch over the year.

(4) Continued focus on getting caught up on the virtualization front, a critical area for the company.

(5) More talk about product strategy as well as product sales but, with Vista launched, it is also likely that the company will step back and objectively consider how it will organize itself for the next round of product development.

Biggest challenges and competitive threats.

(1) Its own installed base: The larger the installed base gets, the harder it is to move, and the longer it takes to transition.

(2) Early enterprise adoption: In general, Microsoft's best year usually comes the year after the release of new technology, not the year of the new product release.

(3) Linux and other open source software: While Linux is already a threat on the server side, Microsoft's current emphasis on reducing piracy on the client side, may accidentally accelerate the option of Linux as a client operating system.

(4) Virtualization: Microsoft has been unable to stall the market while getting its products into play, so the company now finds itself in the unusual position of having to battle its way back to a competitive position in the market against established competitors such as VMware.

Michael Cherry, lead analyst for Microsoft at Directions on Microsoft

Predictions.

(1) 2007 will be a good year for Microsoft with regard to Vista as there are features that businesses should be interested in, such as User Account Control and BitLocker Drive Encryption.

Biggest challenges and competitive threats.

(1) Microsoft's performance: It has to get better at describing in meaningful and measurable terms its message around Windows and Office Live.

(2) Ease of use: It has to make it easier for customers to legally use its products.

(3) Licensing: Customers have to be able to understand how to best license only the amount of software they really need to be productive, and no more.

(4) Better communication: As the licensing programs are extremely hard to understand, Microsoft has to do a far better job of communicating when products will be delivered, and what features they will include.

Rob Enderle, the principal analyst at the Enderle Group

Predictions:

(1) Not a lot of demand for Vista or Office 2007, which are also being launched during the slowest time of the year for sales.

(2) Apple, which is at its strongest, is going to move aggressively against Microsoft, which is in anything but peak shape, adding extra drama to the entire year.

(3) Microsoft will start talking about the revolutionary changes that will happen post-Vista and those offerings for Vista that have, as yet, not been announced.

Biggest challenges and competitive threats.

(1) Finding its center: Microsoft's biggest problem is not open-source software or Apple, but rather the ability to return to vitality so it can compete as it once did, and enjoy the financial benefits of a robust equity market surrounding its stock.

(2) Microsoft itself: It has unintentionally been the engine underneath Linux and has not completely fixed that.

(3) Serving customers: Microsoft desperately needs to identify the customer they must serve for each product/solution and place everyone else in subordinate positions.