In the wake of reports about delays in its next-generation version of the Windows 95 operating system, Microsoft (MSFT) today admitted that what it calls Memphis and others dub Windows 97 might not be available until 1998.
The software giant acknowledged it has begun warning hardware makers that Memphis, which product manager Phil Holden said should generate significant retail sales, won't be ready to ship on PCs for the ever-important holiday buying season.
But this begs a bigger question: Why is Microsoft upgrading an operating system that is just now taking root in corporations and among home users?
"Windows 95 is a sure thing in the home market, and nothing [in Memphis] is going to change that," said Forrester Research analyst Tom Rhinelander. "In the corporate space, people haven't digested Windows 95 and aren't going to jump on Windows 97 or whatever it's going to be called."
Eighteen months after its ballyhooed release in August 1995, Windows 95 operates between 15 and 20 percent of all Windows desktops in the corporate world, according to Forrester and other research firms. The bulk of desktops are still running Windows 3.1.
Analysts say if PCs won't have Memphis by Christmas, it's unlikely that the OS upgrade will be on computer store shelves at that time.
"Imagine the problem an OEM [original equipment manufacturer] has when Microsoft has an operating system it's advertising on the shelf next to a PC that still has Windows 95," said Chris LeTocq, a software analyst at Dataquest. "From Microsoft's perspective, it'll have to hold back their own shrink wrap in order to appease the OEMs."
Holding back means a 1998 delivery date for an upgrade that Microsoft has been targeting for the end of this year. Such a delay is not unusual for Microsoft or any software vendor, for that matter.
Memphis is slated to go to beta in the second quarter of this year.
Whatever its arrival date, Memphis might not be compelling enough to persuade users, at home or at work, to upgrade, analysts say. At the very least, it doesn't merit a full numerical upgrade, according to Dataquest's LeTocq: "Go through the feature set and it's hard to find something that calls for labeling it a full upgrade release."
The highlight of Memphis is the use of the Internet Explorer browser as the main interface so that users can read files on the hard drive just as they would read a Web page. With the integration of IE, Microsoft promises a new look and feel. But are users clamoring for such changes? Microsoft says they are and that all development is driven by customer feedback.
"The fact that we're fusing the worlds of the desktop and the Internet is a compelling reason [to upgrade]," said Microsoft's Holden. He added that there will be a "huge demand" among PC enthusiasts and "fairly high demand" among home users.
"The area that is hardest to judge is the corporate customer," Holden noted.
In addition to the fused desktop, new features include tools to let network administrators maintain PCs remotely, the ability to boot up instantly, and support for new multimedia such as DVDs. The instant boot-up technology, or OnNow, is the most compelling new feature, LeTocq said.
Another reason for potential Memphis buyers to hesitate is the inclusion of the Windows driver model, which sets the table for the Windows NT kernel to be included in a future version of Windows. Microsoft has stated publicly that it envisions one future operating system that encompasses the capability of both Windows NT, its industrial strength server-based operating system, and the Windows 95 consumer line.
Even if that future is a few years away, slow-moving corporate buyers that don't want to deal with the massive task of upgrading--even those with Windows 3.1--might be content to bypass Memphis and wait for the future.
"Right now in the tech space, people are taking about easing the pain of the desktop [upgrade]," said Forrester's Rhinelander. "There's a real lag time between what you can introduce and what people can absorb."
It's a situation that others hope to exploit. Apple Computer is working feverishly on Rhapsody, its modern operating system project based on cross-platform software that will let developers write applications for several platforms, including Intel- and PowerPC-based machines. Meanwhile, Sun Microsystems and Oracle are leading the charge for thin-client network computers that run Java applications.
Amid news of the Memphis delay, Microsoft's shares fell 4 percent to close at 90-1/8, down 3-7/8.