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Microsoft again pushes back .Net Server

The company says delivery of the server version of its Windows operating system will not happen during the first half of 2002.

Microsoft has again delayed the delivery of a major version of its Windows operating system.

Microsoft said late Thursday that Windows.Net Server, the successor to its Windows 2000 Server operating system, will not ship during the first half of 2002, as Microsoft had earlier indicated. The company now hopes to issue the first release candidate--or near-final testing version--sometime in the summer and a final version later in the second half of the year. Conceivably, many customers might not receive the product until next year.

The delay is the second in about 13 months. Microsoft had originally projected delivering .Net Server during the second half of last year, but in April it pushed back the release until early 2002. The product, which is expected to play a significant role in Microsoft's .Net software-as-a-service strategy, would replace various flavors of Windows Server 2000.

Microsoft has been roundly criticized for other product delays. But analysts instead see this delay as a wise move.

Microsoft can use the extra time to beef up .Net Server's security features, in response to Chairman Bill Gates' "Trustworthy Computing" initiative. In a mid-January e-mail to Microsoft employees, Gates said the company must make security a top priority, even more than new product features.

"We sort of expected this delay, especially after they started the trustworthy Windows initiative, that they might want to include more stuff in .Net Server to take advantage of that," said Gartner analyst Michael Silver. I think people would have been skeptical if Microsoft had delivered a brand-new product without tying (in) whatever it is they learned from this trustworthy Windows initiative they're hyping."

Microsoft stopped software development for a month, while 70 development teams conducted audits of Windows XP and .Net Server. Any XP fixes will be available through Windows Update or with the Service Pack 1 collection of fixes tentatively scheduled for a third-quarter release.

IDC analyst Al Gillen says Trustworthy Computing may delay far more than just the release of .Net Server.

"That's contributing to the delay of a lot of things they have under way--and frankly, that's a good thing," he said. "I think most customers would rather have their products delayed and have (them) come out better."

More leeway
The product pushback could have another unforeseen benefit: giving Microsoft customers more time to update their server operating systems from Windows NT 4.0 to Windows 2000.

"Windows 2000 really hasn't propagated through the industry the way Microsoft would have liked for it to," Gillen said. "It's the hot-selling product for them on the server side, but it's replacing the huge installed base of Windows NT 4.0 on hardware that probably can't even support Windows 2000."

IDC recently conducted a survey asking businesses how far along they were in moving to Windows 2000 Server from Windows NT 4 Server.

"Three-quarters of them told us their current configuration was 50 percent or fewer of their server systems upgraded to or newly deployed with Windows 2000," Gillen said. "What this tells me is that you have a very large collection of people that really aren't that far along in their migration to Windows 2000."

In the early days of selling Windows server products, Microsoft touted their low cost and flexibility compared with "legacy" mainframe and Unix operating systems. But Microsoft faces the same problems as the competitors it replaced on servers.

"What Microsoft is learning here is that they have a very large installed base of what some people would say is a legacy system," Gillen said. "It's a product that has been replaced and basically put on life support by the vendor. It's going to take time for the switch, and that's normal."

Chris Pels, a computer systems consultant with iDev Technologies in East Greenwich, R.I., and president of the .Net User Group of Greater Boston, said many Microsoft customers struggle to keep up with new product releases. "Things (from Microsoft) come out very quickly and it's very hard to keep up. Microsoft concentrates on the new stuff, but everyone else has to get value out of the (software) they already have. They end up with all of this technology, and it's tough to absorb," said Pels.

Microsoft discontinued Windows NT 4.0 last fall.

Gillen predicted a much easier migration for companies moving to .Net Server from Windows 2000, because the differences aren't as great as between Windows 2000 and NT 4.0.

Bad for .Net?
But the slow Windows 2000 Server adoption hurts Microsoft in another way. With the product, Microsoft introduced Active Directory, a feature that is expected to play an important role in .Net Web services.

"I don't know if this slows the acceptance of .Net because you're looking at a longer cycle in terms of people writing applications," Silver said.

Long term, .Net Server's delay could affect more mainstream software applications and services.

If nothing else, the delay could help Microsoft as it struggles to redefine .Net My Services, its plan to offer Web services to individuals and consumers.

"It will give them more time to develop their strategy around .Net, because it sounds like the strategy is not fully baked," Silver said.

News.com's Mike Ricciuti contributed to this report.