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Study: High cost for Windows 2000 transition

Companies looking to Microsoft Windows 2000 to help curb spiraling information technology costs should think again, according to a research report.

Companies considering Microsoft's Windows 2000 to help curb spiraling information technology costs should think again, according to a research report.

The "migration" cost of a transition to the new operating system could be steep--up to $3,100 per PC, according to a study prepared by the Gartner Group consultancy. That will make it difficult for companies to achieve any return on their investment for at least three years, the report says.

In product literature for the oft-delayed successor to Windows NT, Microsoft claims that 2000 delivers "increased reliability, availability, and scalability with end-to-end management features that reduce operating costs."

But Michael Gartenberg, a vice president at Stamford, Connecticut-based Gartner, said the price of switching to Windows 2000 is so high that a company won't realize lower costs for three years. "By then, you would have to do a migration to another operating system," he said.

Karan Kahnna, a Windows 2000 product manager at Microsoft, disputed the study's findings and said Microsoft has conducted studies of its own indicating that companies moving to Windows 2000 will "realize benefits immediately."

The stakes are high for any company weighing a transition in Microsoft's corporate operating systems. While businesses evaluate the time and expense of retooling large numbers of computer systems, the giant is counting on Windows 2000 to extend its reach into high-end networks, often the province of the rival Unix system.

Microsoft's Kahnna acknowledged that migration carries a cost but said moving to Windows 2000 can streamline help-desk operations, make PCs more manageable, and provide companies with more control over other software applications. That combination can help to "significantly" reduce costs, he claims.

Companies would realize return on their investment well before three years, he said.

When asked to provide an estimated range of costs involved in migrating to Windows 2000, Kahnna said, "It's very difficult to gauge that. It would depend on the customer scenario."

Gartner compiled its estimates using a model based on a typical 2,500-user, network-connected company. The model represents only desktop migration costs, not "back end" server or Active Directory implementation costs. Active Directory is a new technology included in Windows 2000 to make management of networked users and resources easier.

Upgrade calculations include fixed costs, the cost of doing work, the cost of bringing hardware and software up to speed (such as additional memory requirements), and the cost of testing and software acquisition.

The desktop migration cost for a company moving to Windows 2000 from Windows NT Workstation can cost up to $2,050 per PC, Gartner estimates. Migrating from older versions of Windows, including Windows 95 and Windows 98, could cost as much as $3,100 per PC.

Gartner's Gartenberg did identify benefits of moving an entire organization to Windows 2000, based on the notion that a complete migration of desktop and server systems will provide a more "managed" environment. Typically, the more control one has over a system, the cheaper it is to maintain.

But in all, the road to Windows 2000 is very expensive, Gartenberg said. Migrating to Windows 2000 from Windows NT or Windows 95 or 98 is "a costly proposition with little return on investment."

"We're reminding people that they're looking at one side of the equation because the cost of getting to TCO [total cost of ownership] is greater than the cost they are going to save...It's a money-losing proposition," Gartenberg said. "[Microsoft] touted that the cost of ownership of running Windows 2000 is cheaper than NT 4.0 or Windows 95, but they don't tell you what it costs to get there."

Indeed, he added, "Over time, many people will do the migration simply because of operating system inertia, but just because a new release of an operating system is out, doesn't mean you should be the first one on the block to do the migration."

A recent study by another research house, International Data Corporation, suggests that few companies are planning immediate adoption of Windows 2000. Most firms plan to wait 6 to 18 months before beginning wide-scale implementation of Windows 2000, mostly to give various new technologies in the operating systems time to mature.

Last month, Microsoft detailed the specific features offered by each version of Windows 2000 and said this month that it will deliver a second "release candidate" to testers and members of the company's preview program.