While its existing Windows NT operating system is used mainly in departments of larger corporations and in offices with 25 or fewer users, Microsoft is targeting its next-generation operating system--Windows 2000--at large businesses which need to support thousands of people.
To attract these corporate buyers, Microsoft today demonstrated two networking features it has built into its new operating system. Windows 2000 has the ability to prioritize data traffic on a network to make sure important software has enough bandwidth. The operating system also supports Virtual Private Network (VPN) technology, which allows mobile workers to connect to their corporate networks securely through the public Internet.
The two technologies could make Windows 2000 more appealing to corporate users building larger, mission-critical applications, said International Data Corporation analyst Dan Kusnetzky. "Microsoft is very serious about making Windows 2000 considered as an enterprise platform, and they understand the Internet is likely to be the backbone network for company communications," he said.
Kusnetzky said Microsoft's support for VPNs could drive the widespread adoption of the technology. A recent study by industry consultants Forrester Research predicts the VPN market will grow from $751 million in 1999 to $14.4 billion by 2002.
"Anything Microsoft does will have an impact. If they adopt a new technology, it makes it easy for customers to adopt it. It can instantly go from obscurity to mainstream," he said.
Windows 2000, which is expected to ship by year's end, is intended to boost the operating system's ability to support larger applications. Microsoft has said the operating system will include a wide range of new features, such as support for clusters of computer systems that boost processing power, load balancing for better reliability, and up to 32 processors for overall faster PC performance.
At the Network+Interop trade show today, Microsoft made a joint announcement with Cisco Systems to underline the ability of the software giant's new OS to guarantee that vital applications receive the network bandwidth that they need.
Cisco, as well as other networking firms like 3Com, are supporting new standards in its switches and other networking equipment that allow IS managers to give priority to certain applications as they travel along a network. In a demonstration using a Cisco switch and Windows 2000, the companies showed that an IS manager could give priority to a SAP billing transaction over a SAP printing transaction.
In the past, IS managers could give priority to certain SAP applications over others, but couldn't make the distinction between billing and printing transactions, said Rod Cully, Microsoft's lead product manager for Windows networking.
The operating system runs Cisco software that sets priorities and serves as a virtual "traffic cop" between an application and the network equipment, he said.
Microsoft is also bundling VPN software on the desktop version of Windows 2000, which will allow mobile users a safe, secure connection to their corporate network. For the server edition of Windows 2000, Microsoft has built in VPN technology that ensures the connection between the user and the corporate network is secure and routes data and transactions back and forth on the public Internet. Using new directory software called Active Directory, network administrators can control what part of a corporate system users can get access to, Cully said.
Windows NT currently leads the server operating system pack with 38 percent of total units shipped, beating out Novell's NetWare, with 24 percent market share, and Unix, with 18 percent. But sales of Unix--which can support thousands of users--reached $2.5 billion last year, while NT sales amounted to roughly $1.4 billion.
"Microsoft would love to go into the higher revenue, high-end server business," Kusnetzky said.
Later this week, Microsoft plans to ship a second release candidate of Windows 2000 to testers and members of the company's preview program. The final versions of the server and desktop editions of Windows 2000 are expected to ship by year-end.
Microsoft has the potential to win some customers in the large corporate market, Kusnetzky said. According to a recent IDC study, current NT users support about 25 terminals, and use the OS for printing and filing services, email, Internet access, and support for company databases.
Through 2001, most respondents to the IDC study said they plan to use Windows 2000 to support larger numbers of users for larger tasks, including running packaged applications like as financial or human resources software.