Critics for years have lambasted Vista, and now Steve Ballmer has finally admitted that Microsoft made key mistakes in its development of the operating system. At a keynote speech yesterday at Microsoft's annual CEO Summit, he admitted Vista "was just not executed well." People who are used to Ballmer's often-bombastic public personality may be surprised at his speech, which was incisive, intelligent, and very thoughtful. But longtime Ballmer watchers know that his public persona is often more for show than anything else. In his half-hour speech, he set the five points that most matter to him as Microsoft's CEO: Recruiting talented employees, making balanced investments, innovating in the right areas, ensuring a positive product flow, and making the right bets for the future (which he said will be the cloud.) During the speech Ballmer asked the question "How do you innovate consistently?" He then spoke about all the difficulties of that go into making the right decisions about how many resources to pour into innovation, and how to choose the right products to innovate around. At ten minutes and fifteen seconds into his talk, he offered this eye-opener: The saga of our Windows product is probably one of the better chronicles, and I'm sure many people went through a cycle either at home or at work with our Vista product. It was just not executed well, not the product itself, but we went a gap of about five, six years without a product. I think back now, and I think about thousands of man-years and it wasn't because we were wrong-minded and thinking bad thoughts and not pushing innovation. We tried too big a task, and in the process wound up losing essentially thousands of man-years of innovation capability. And so a discipline and execution around the innovation process, I think, is essential. That's a major public admission of a serious shortcoming --- that Microsoft waited too long to release a version of Windows, and tried to do too much with Vista. The even bigger admission is that Microsoft lost "thousands of man-years of innovation capability." It may be that Microsoft learned from its mistake. Major products released since Vista have been well designed --- Windows 7, Microsoft Office 2010, Bing, and the new Hotmail. Microsoft is on a winning streak, and it may be that by recognizing the mistakes it made about Vista development helped the company regain its focus.