As of this writing, I have yet to confirm the exact nature of the VMware issues. I suspect the VMware Authorization Service bug had something to do with Windows 7's revamped UAC (User Account Control) system. An attempt to bolster system security by requiring the user to confirm certain common functions via a dialog prompt, the nettlesome UAC has been one of the more unpopular features of Vista. In Windows 7, Microsoft has responded to the criticism by suppressing most UAC prompts by default. Because VMware Workstation 6.5 was designed to work seamlessly with the older, more intrusive Vista model, my guess is that Windows 7's attempts to suppress UAC breaks the VMware shell's UAC interaction logic; it's no longer able to traverse the various process privilege levels and speak to its Authorization Service component.

Just how many Vista-compatible applications will break in this manner is anybody's guess. But as a person charged with supporting a UAC-aware software product on Windows, I'm genuinely concerned. Even more disturbing are the unexplained driver compatibility issues. If Windows 7 really is Vista at its core -- as the close similarity of their System process, memory, and performance profiles suggests -- then the fact that Microsoft has still managed to break applications as popular as Daemon Tools and Skype (both have tens of millions of users) is disconcerting and perhaps even alarming. At the very least, it doesn't bode well for Microsoft's promises to make the Vista-to-Windows 7 transition truly seamless.

Lipstick on the pig

So where does this leave us? For starters, we can now say with some certainty that Windows 7 is in fact just a repackaging of Windows Vista -- an "R2" release, to use Microsoft's nomenclature on the Windows Server side of the house. Key processes look and work much like they do under Vista, and preliminary benchmark testing shows that Windows 7 performs right on a par with its predecessor. Frankly, Windows 7 is Vista, at least under the hood; if nothing else, this should translate into excellent backward compatibility with Vista-certified applications and drivers.

Except that it might not. The M3 build of Windows 7 breaks all sorts of things that, frankly, it shouldn't be breaking. Worse still, the suspected source of a major compatibility bump -- the neutered UAC prompts -- is in fact architectural in nature, one of the few truly new features of Windows 7's secure computing stack.

Bottom line: So far, Windows 7 looks and behaves almost exactly like Windows Vista. It performs almost exactly like Vista. And it breaks all sorts of things that used to work just fine under Vista. In other words, Microsoft's follow-up to its most unpopular OS release since Windows Me threatens to deliver zero measurable performance benefits while introducing new and potentially crippling compatibility issues.

Creative organizations rejected Windows Vista en masse, and Windows 7 is Microsoft's response. Simply put, it's not enough. Slapping an upgraded UI onto an already discredited OS platform fools nobody and serves only to further alienate the very enterprise customers whom Microsoft claims to be wooing. What the company needs to do is listen to its corporate customers and implement the features that IT shops have been requesting: lower resource requirements, better backward compatibility, and a clear migration strategy from Windows XP. The window for lowering resource requirements in Windows 7 has undoubtedly closed.

But it's not too late to fix Vista's spotty support for legacy Windows applications. Application virtualization technology is an ideal way to isolate troublesome applications. If Microsoft were to include its App-V bits in Windows 7 -- as part of a legacy-compatibility subsystem that could take over when a problem application is detected -- I'd take its claims of targeting business more seriously. As it stands, there's little in Windows 7 that creative shops will find compelling. Most of the new features are targeted squarely at consumers, which is the same formula that got Microsoft into trouble with Vista.

The larger question is what all those Vista refuseniks will do when their hopes for Windows 7 are crushed. Some will undoubtedly give in. After all, you can prop up Windows XP only for so long. However, for many shops, this may be the perfect opportunity to seriously explore the alternatives outside Microsoft. Ubuntu Linux gets more polished each quarter, while Apple hardware and Mac OS X continue to impress technical and nontechnical users alike.

One thing's for sure: Microsoft's once unassailable dominance of the enterprise desktop is wobbling on a precipice. Windows Vista has permanently eroded the company's reputation among IT decision makers, and from what we've seen of Windows 7 so far, Microsoft still does not "get IT."