That's because upgrading after midyear would mean taking on a long and challenging project, with the clock ticking down on Microsoft's support for that system. But waiting could be costly, too, as companies knuckle down for several years of running two or more different versions of Windows at the same time.
"If you haven't started Windows 2000 upgrades by the second half, you should really consider whether Windows XP is a better fit," said Gartner analyst Michael Silver.
Windows XP--the upgrade to versions 95, 98, Me and 2000--is expected to hit store shelves Oct. 29 but be available to Microsoft's largest customers earlier that month.
Microsoft's biggest problem now is how to keep Windows 2000 upgrades growing while building enthusiasm for Windows XP.
"Windows XP already has hurt Windows 2000 sales to some extent," Silver said. "We had our Windows conference last week, and almost every client was asking what they should do. There are already some people who have decided to skip Windows 2000 because of the hype around Windows XP."
Waiting for Windows XP could be costly for companies forced to run multiple operating systems or extend the testing required for installing a new version of Windows, Gartner warned. Companies typically need a minimum of six months to test a new version of Windows with existing applications before starting upgrades.
Windows XP, which is largely based on version 2000 code, is not expected to be an easier upgrade to test and implement. In the case of Windows 2000, Gartner found that one in four companies would have trouble migrating to the operating system through 2003. Less than 10 percent of Windows 95, 98 or NT machines were upgraded to version 2000 last year, vs. a beginning-of-the-year estimate of 15 percent to 20 percent, according to Gartner.
Because of these potential compatibility problems and the drag of the slowing economy on PC sales and upgrades, many companies have not started their Windows 2000 upgrades as they might have after the introduction of other versions, Gartner concluded.
Those companies that have begun the switchover to Windows 2000 may want to continue with their plans, Silver said.
In an e-mail exchange with CNET News.com, Michael Korgie, infrastructure planning director for Koch Industries said his company couldn't wait for Windows XP and would continue Windows 2000 upgrades underway.
"We have PCs to replace and it would not make sense to deploy Windows 98 or Windows NT with the intent to migrate to Windows XP later," he said. "The most economic choice will be for us to continue to deploy Windows 2000." In fact, the company plans to wait until the first Windows XP service pack--or collection of bug fixes--before starting upgrades.
Koch, a diversified investment and trading company involved in the oil and gas industry, employs 11,000. Currently about 70 percent of desktops run Windows NT, 20 percent Windows 95 or 98 and 10 percent Windows 2000, Korgie said.
Silver is scheduled to present his findings Tuesday at Gartner's Spring Symposium/ITxpo in Denver.
A Merrill Lynch survey released in late April found that more than 40 percent of chief information officers had cut spending plans since the start of the year. At the same time, PC sales collapsed during the first quarter, down 9.5 percent year over year, according to IDC.
This could put companies caught between older versions and Windows 2000 or XP in a tough spot. For reasons of cost, many larger businesses prefer to run just one operating system. But the economic slump and Microsoft's recent blitz of operating systems--for example, Windows 2000 in February last year and Windows XP in August--have made that nearly impossible, Gartner concluded.
"Microsoft needs to put out a new OS every 18 months or so, but they only fully support it for four years," Silver explained. "Look at Windows 2000. It's been more than a year since it shipped, and there are lots of folks that haven't touched it. If you're not starting on Windows 2000 soon, you probably should skip it."
Short-changed on support
On the flip side, because Microsoft wants customers to upgrade to the newest operating system--and so pay new license fees--the software maker doesn't offer long enough support, and that will hurt many companies during the transition from Windows 95, 98 or NT to versions 2000 or XP, Silver said.
"Companies want to standardize on one OS, but it takes a couple of years to do that, and four years of support makes the time really short," Silver said. "People are going to have to realize it's going to be difficult for them to remain in a homogeneous environment. They're going to have to have two or three (operating systems) at one time."
At the end of June 2003, Microsoft will pull the plug on Windows 98, NT and 2000 assisted support, giving many companies a fixed deadline by which to go to Windows XP. That makes the time particularly short for companies that have yet to aggressively start Windows 2000 upgrades. Their only choice may be a gradual transition to Windows XP that means running multiple versions of the operating system.
But doing that is not cheap. Silver estimated that the cost of supporting two operating systems is 5 percent to 7 percent higher than the cost of supporting just one. Conversely, it costs "$230 on the low end to $500 or more for labor and licensing to upgrade a machine to Windows 2000," Silver said. That does not include hardware costs.
"If you have a third of your machines on a particular OS, the cost of upgrading the other two-thirds is probably going to cost more (while) supporting two OSes for the extra one to two years," Silver said.
Koch's plan is to complete the move from Windows 98 and NT before Microsoft's support runs out in 2003.
While Korgie said it is important to see new features added to Windows, he said "we'd like Microsoft to maintain OS versions for much longer periods of time and provide more (options) and ease in terms of upgrading the OS."
For those companies looking at Windows 2000 or XP upgrades, the more immediate concern is getting rid of Windows 95, 98 or NT. But deciding what systems to upgrade may not be easy. Gartner recommends upgrading the operating system with the hardware rather than using older PCs.
"I wouldn't take a machine that's more than one year old and upgrade it," Silver said. "How many more years are you going to keep that? Wait for another year or so, when you're going to upgrade that machine to upgrade the OS. In practice, a machine should die with whatever operating system it was born with."