Service Pack 3 (SP3) for Windows XP is making progress, we hear. Release Candidate 1 is now available from MSDN and also from TechNet.

Windows XP SP3 is expected around about the same time as Windows Vista Service Pack 1. However, it remains true that the installed base is overwhelmingly Windows XP.

Strange then that an XP update is not going to encourage IT organizations to migrate to Vista. Why switch when XP runs well enough and maybe much better with SP3 onboard?

“A public RC will be available at a later date,” a Microsoft spokesperson said in a statement. “Windows XP SP3 is a rollup that includes all previously released updates for Windows XP, including security updates, out-of-band releases, and hotfixes. We are targeting 1H 2008 for the release of XP SP3 RTM, though our timing will always be based on customer feedback as a first priority.”

Pity those of us us who have computers running each version of Windows.

Microsoft CEO, Steve Ballmer, signalled another step towards a dramatic change in the software giant’s business model.

In London on a whistle-stop tour, Ballmer said, “We are a software company, and yet in a sense, the very form of our core capability is changing. We need to change our capabilities so that we are not just good at writing bits that you put out on CD and deliver, but rather writing this thing that is a living, breathing, dynamic, organic thing.

Ballmer says that CTO Ray Ozzie’s vision of software as a service, or software plus services as Microsoft prefers, will eventually overtake shrink-wrapped software sales.

“It’s not in the next two, three, four years, but in the long run it’ll happen. Some of that money will come through subscription revenues, some will come through transaction revenues and some will come through advertising revenues. The average consumer really doesn’t like to pay for things. And anything that can be ad-funded sensibly for the customer and sensibly for the provider will be. Will online publications be largely ad-funded as things move from the physical world to the online world? I think the answer to that is yes.

“I think there will be some subscription businesses, and yet I think the rest of the group will be either ad-funded or essentially not for profit.”

Ballmer also drew attention to the dangers of Google’s dominance in online advertising, “It could be quite an economic problem for anybody who wants to offer an ad-funded experience on the internet, or anybody who wants to buy advertising,” he says. Predictably he put Microsoft forward as “the most sensible, credible alternative to Google”.

On Windows Vista and its critics he said, “The uptake on new computers has been very good amongst consumers. We’ve a little bit more work to do to resolve some issues that are slowing acceptance in smaller businesses and, as always, it takes longer to get things through the approval process of larger businesses.”

Is Microsoft interested in buying a stake in social network site, Facebook? “Sure they are an interesting internet property. They have a lot of growth, a lot of page views, a lot of users and we want to make sure that their stuff runs on our advertising platform, and we are excited to be there. We will make acquisitions where they make sense. Our strategy is to be strong in the areas of communications and social interaction; to be strong in the area of search, portal and information management; to be strong in advertising platforms. And if acquisitions will accelerate that as Aquantive did, we will make more acquisitions.”

There’s a useful preview of S. E. Slack’s new book : Breakthrough Windows Vista over on the Microsoft website.

The preview is called, 4 Ways to Use Windows Vista at Home.

I’ve been using Windows Vista for several months now, first testing it and then writing my book, Breakthrough Windows Vista. Now I’m running the final version on my computer. … Windows Vista can help you do a lot of things—new tools to help you organize, store, and edit your music and photographs are just two examples of how you can use the new operating system. In this article, though, we’ll discuss four ways that my family and I have already started to take advantage of Windows Vista at home.

The four ways are :

1. Stay in touch with Windows Sidebar
2. Find what you need with Instant Search
3. Get organized with the multi-person Windows Calendar
4. Keep an eye on your kids with Parental Controls.

Read the rest of the piece.

Microsoft is running an online Small Business Summit this week : “… a nationwide event that provides small businesses with the tools and information they need to help their business soar”.

I think they’ll try to sell some proprietary software off the back of this. It will be interesting to see which products they are pushing. Windows Vista and Office 2007 are sure to be included.

Of course, Microsoft was a small business once. It began as a startup in a garage by two geeky kids called Bill Gates and Paul Allen. Bill even dropped out of Harvard to do it. That’s the motor of all entrepreneurial activity.

More than 30,000 small-business owners and partners from around the country are expected to participate in this free event held online with a first-day event in Redmond, Washington. The summit features more than 58 sessions covering small-business topics including branding, sales and marketing, security, business efficiency and mobility, and participants have the flexibility to join online from their home or office. In addition, small-business owners can go to their local participating CompUSA store to watch the webcasts, network with peers and have a direct dialogue with Microsoft and CompUSA representatives who understand their unique technology and business needs.

Here’s yesterday’s transcript of keynote remarks by Kevin Turner, Chief Operating Officer, Microsoft Corporation, Microsoft Small Business Summit 2007.