Some may take wait-and-see approach to Windows 2000

Microsoft may be entering the final phase of its preparations for the release of Windows 2000, but there's no guarantee its target customers are on the same schedule.

4 min read
Microsoft may be entering the final phase of its preparations for the release of Windows 2000, but there's no guarantee its target customers are on the same schedule.

Microsoft is nearing completion of the long development process for Windows 2000, the latest version of its corporate operating system that was formerly called Windows NT. The beta testing program is nearing completion, and Microsoft has announced it will release the software to manufacturers on February 17. Yesterday, it detailed the pricing for the new product.

But even as Microsoft puts the finishing touches on the often-delayed OS, PC makers, analysts, and the large corporations expected to eventually install the software are indicating that the process of adopting Windows 2000 will be slow and may not even start until the second half of 2000 for many.

Large corporations, which are notoriously conservative in their technology decisions, will likely wait until the first round or two of bug patches and service releases are available before installing Windows 2000, according to Mike DeNeffe, vice president of marketing for NEC.

"Our customers will wait for Windows 2000 Service Release 2," he said, noting that although many companies are excited about the Windows 2000 support for USB ports, corporate IS (information service) managers will probably not risk investing time to install the untested software. DeNeffe predicted that most companies will begin looking at Windows 2000 in June.

In addition to waiting out early bugs, many companies will be busy dealing with problems related to the Year 2000 bug, DeNeffe added. Still, with Microsoft's marketing muscle and likely retailer promotions, initial sales will probably be strong, analysts said, with a potential drop off later.

"There's a whole ramp-up even though the stores don't get it until February," said Dataquest analyst Kimball Brown. "But then there's a lull until the first service pack, which probably won't be until fourth quarter, then it's off to the moon."

Windows NT 4 showed strong demand for the first 18 to 24 months before leveling off, analysts said. But industry observers expect a delay before big companies seriously consider committing their PCs, servers, and data centers to Windows 2000.

"There will be many early adopters going out to buy Windows 2000, but you can expect larger companies to wait until the first or second service pack before really adopting Windows 2000," said Technology Business Research analyst Joe Ferlazzo.

Ferlazzo predicted a slow sustained build up, but added, "It could be a year or more before you see any large buying by many large companies."

Windows 2000 faces multiple problems out of the gate, analysts said, including weak demand as corporations work through the Y2K technology glitch and competition from the introduction of Monterey in the second half of 2000.

Monterey, a next-generation Unix version, is being developed by IBM and SCO for Intel's Merced processor

Analyst are concerned, however, about Microsoft's Active Directory feature. The feature, like Novell Directory Services, helps technology administrators better manage servers and PCs connected to corporate networks.

Active Directory, like many Windows 2000 features, is new and untested by the industry. Technology administrators also face a steep learning curve.

"It will be likely that corporate customers are going to need a lot of hand holding to deploy this, which is a windfall for professional service providers," said Gruener.

Some analysts do expect demand to be strong right out of the gate, and they believe Active Directory is one reason.

"There is incredible pent-up demand out there for the features available in Windows 2000," said Tony Iams, an analyst with D.H. Brown Associates. "Anyone who has to administer a network with more than a few thousand nodes is certainly feeling pain right now because of the limitations of the current directory structure. Active Directory is going to be a big boost, and those customers are going to need the feature set now."

"Most people will find commercially developed Unix will have the advantage of better scalability and reliability, although Windows 2000 will certainly narrow the gap," said Iams.

When it debuts in February, Windows 2000 Professional will sell for an estimated retail price of $319, the same as its predecessor, Windows NT 4 Workstation. An upgrade from Windows NT will cost $149, the current price to move from previous versions of Windows NT, the company said yesterday in a briefing.

Customers looking to upgrade from Windows 95 or 98--both consumer operating systems--will pay $219. Microsoft previously offered no consumer upgrade, forcing customers to pay full price for Windows NT.

Windows 2000 will be sold in three different versions, for use ranging from desktop systems to sophisticated networks.