Although Windows XP may be the most solid new Windows version ever released by Microsoft--and certainly has occasioned more pride among the Microsoft development team than any previous release--it should not trigger a change in corporate upgrade plans.
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This does not mean that Windows XP offers enterprises no value over Windows 2000 and previous versions. It provides added remote desktop management and software installation tools beyond what Windows 2000 contains that will provide savings to organizations. It also has improvements to the user interface designed to make users more productive. However, the return on investment from these benefits will take months or years to accumulate, while the cost of a massive upgrade will be immediate and large and--if undertaken now--will hit at a time when money is increasingly scarce in many organizations.
Companies that have not started upgrading their desktops to Windows 2000 should go directly to XP instead. However, this upgrade will probably require the replacement of the desktop computer hardware and the operating system as well as the upgrade of some software. Companies considering this may want to wait until mid-October or November, when PCs running Intel's new 845 Pentium 4 chipset should become more plentiful. With the price reductions Intel announced in early September, we expect some Pentium 4-based PCs to be priced at or below the cost of similarly configured Pentium III systems.
Businesses already using Windows 2000 should wait for their next hardware upgrade cycle to move to XP. One piece of good news for these organizations is that XP can be configured to look and feel like Windows 2000, simplifying end-user support during the transition.
Critical test in the consumer market
For the consumer market, the fourth quarter of this year is shaping up to be a critical test for the PC industry, as a combination of rock-bottom component prices (memory, disk drives), new technologies (the 845 chipset, rewritable DVD, low-cost home wireless networking), a solid OS (Windows XP), and the lingering effects of the current price war will create the most compelling systems ever. These systems should provide a positive finish to an otherwise gloomy year.
However, the response of the consumer market will depend on a battle for "wallet share"--whether the home market will buy new PCs or spend its money on new game boxes, such as the Microsoft Xbox, or whether people will hunker down and spend as little as possible out of concern for their jobs--remains to be seen.
Because Microsoft is surrounding the release of XP with a great deal of publicity--even more than it devoted to previous milestone releases such as Windows 95 and 3.0 in the early 1990s, CIOs should expect senior business executives and line-of-business management to ask what the IT group is planning as far as upgrading to XP.
CIOs should reply by showing these executives a clear comparison between the upfront costs of upgrading and reasonable projections for return on investment to demonstrate that a phased upgrade associated with the normal desktop upgrade cycle is, in most cases, the financially wise approach. Companies already well into the process of upgrading to Windows 2000 should continue with that OS for the present.
Another argument for waiting is the possibility of hidden bugs. Although XP appears to be very solid, the final test comes in the marketplace, where things sometimes happen that no tester could have anticipated.
Organizations should shift PC procurement plans to the new combination of the Pentium 4 chip and the 845 chipset during the next two to three months to gain the best price/performance and ensure undisrupted availability of systems, because we expect Intel to rapidly curb Pentium III production.
Meta Group analysts Mike Gotta, Val Sribar, William Zachmann, Jack Gold, Steve Kleynhans and Dale Kutnick contributed to this article.
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