Analysts question mass move to .Net Server

This week, Redmond, Wash.-based software giant issued the first release candidate, or nearly final test version, of Windows .Net Server. This successor to Windows 2000--delayed by more than a year--is intended to become the cornerstone of Microsoft's much-hyped .Net Web services strategy.

Getting customers to make the move to .Net Server is essential to fostering Microsoft's shift to Web services, particularly among the large number of businesses still running Windows 2000's predecessor, Windows NT 4 Server. Microsoft asserts that nearly one-third of Windows server users are strong candidates for .Net Server.

"This release, more than anything else, is really the release that NT 4 customers are looking to as being a strategic path," said Bob O'Brien, Microsoft's Windows .Net Server group product manager. "For the NT 4 customer who wasn't ready for Windows 2000, .Net Server becomes a very attractive target for them in terms of their upgrade path."

But Microsoft Chairman Bill Gates acknowledged just this week that, in some respects, the company's .Net plan has been slow to catch on.

And several roadblocks stand in the way of widespread .Net Server adoption. The long delay in the operating system's release has led some Windows NT 4 customers--who might have moved to the new OS--to select Windows 2000 instead, said analysts and IT consultants. Other companies see no need to move off of NT 4 anytime soon, particularly since migration costs are typically high and IT budgets at many companies have been slashed.

"I am not seeing an overwhelming push toward .Net (Server) as yet, although momentum is growing," said Mark Romanowski, senior vice president with New York-based IT consultancy AMC, which advises companies on enterprise infrastructure design. "Many customers are still contemplating Windows 2000 Server and Advanced Server."

Romanowski also said some of his clients may be eyeing Windows competitors in response to Microsoft's new licensing plan, set to take effect next week, which could raise costs for some customers. "I also think that in some cases this may open the door for...Linux. Microsoft's new licensing plan is quite expensive," he said.

Delays have been costly
Microsoft released Windows 2000 Server in February 2000, with the expectation that many companies using NT 4 would quickly move to the new operating system. But Windows 2000 introduced a number of changes, such as a new directory system, which stalled adoption. Less than 5 percent of NT Server users had moved to the newer version by the end of 2000, according to market research firm Gartner.

The pace quickened last year, but still cautiously. NT 4 accounted for 61 percent of the Windows Server install base at the end of 2001, according to market research firm IDC. Although IDC expects more rapid adoption, NT 4 is still projected to account for 32 percent of Windows Server software this year.

"I don't exactly buy into the notion that there is this really large segment of Windows NT 4 users out there who are waiting in desperation for .Net Server to come out," IDC analyst Al Gillen said.

Part of the problem is that Windows 2000 may just be too good for NT 4 users to resist. "Windows 2000 is in my opinion is the best operating system product Microsoft has ever delivered in terms of a new-release product," Gillen said.

Repeated delays completing Windows .Net Server may also have stalled enthusiasm.

"In 1999 we thought (.Net Server) would come out a year after (Windows) 2000 Server," Gillen said. "Those people who thought they would wait until the next version came out because it would be better, well, they had a really long wait. If they really wanted to go, they've probably already started on Windows 2000."

Gartner analyst Michael Silver agreed the delay could have cost Microsoft, in terms of getting some of its most loyal customers onto the latest version of Windows Server.

"We did a survey last year, and especially European respondents indicated they would skip 2000 and go straight to .Net," Silver said. "The problem is they thought .Net Server was going to be out this year and that they would be able have a good percentage of their users authenticating to .Net Servers by the end of the year. That hasn't happened."

Microsoft had expected Windows .Net Server, originally dubbed Windows 2002 Server, to be widely available in the second half of 2001. But in April of last year, the software titan pushed back delivery until first half of 2002. A second delay in March meant Windows .Net Server will not be released before late this year.

"We're still on track for the end of the year for delivering the product," O'Brien said. "We pretty traditionally do one more release candidate before" the final release to manufacturers.

Many analysts take Microsoft's delivery guidance to mean that .Net Server will be deemed ready, or golden, this year, but that few, if any, customers will get the software before first quarter 2003. Many NT 4 customers already have shifted their focus to Windows 2000, which could mean they will hold out until the version that comes after .Net Server, say analysts.

Is Windows 2000 too good?
Microsoft's larger problem may not be in moving its NT 4 customer to .Net Server but in getting those running Windows 2000 to switch. In that sense, the stability of Windows 2000 could discourage upgrades.

"If customers are happy with 2000 and it's running stable for them, they're probably not going to be in such a rush to go to .Net Server," Silver said.

Gillen likened the move from Windows 2000 to .Net Server to the incremental change between Windows NT 3.51 and NT 4. He noted that there is not "any huge functional change or performance change." On one hand, that makes the transition easier. On the other hand, some customers might not see the benefits of quickly switching to .Net Server from Windows 2000.

"There are incremental benefits to be achieved from Windows .Net Server, particularly for specific machines, like domain controllers, or anyone that is planning on doing anything with Web services. These people will make the move to .Net Server fairly quickly."

But Microsoft appears ready for this circumstance, particularly as the company aggressively advances its Web services strategy. The company has added support for .Net Framework--a key part of its Web services technology--to Windows 2000 as well as to .Net Server.

"We recognize that with this product there would be a lot of coexistence with Windows 2000 and .Net servers," O'Brien said. "The customers who have Windows 2000 will upgrade certain parts of the server infrastructures to take advantage of some of the new features."

Still, at least a minority of the businesses still running NT 4 may simply skip over Windows 2000 to .Net Server. "There are some people who are hungry," Silver said. They've been on NT 4, and they realize at this point Microsoft is planning to end support by end of 2003. If they haven't done anything by now, a lot of them are eyeing .Net Server."

PC makers could help that process, as Microsoft expects at least some to offer the .Net Server first release candidate preinstalled on some systems.

"We saw that with Windows 2000, and we fully expect that to be the same case with Windows .Net Server," O'Brien said. "It would not surprise me to see preinstallation" by PC makers.

Microsoft itself is getting in on the early action, showing its support for the prerelease version by putting the software to use. About half the servers running Microsoft's Web site are using the release candidate.

"By the middle of August, 100 percent of Microsoft.com will be on Windows .Net Server," O'Brien said. In the software business, companies running their own software are said to be "eating their own dog food."

"It's dog food in a very visible way," said O'Brien, referring to the visibility of the high-traffic Microsoft Web site.