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Windows Server 2003's competition: NT, Windows 2000

Microsoft has now launched Windows Server 2003 (no, really, it has!), and the new platform has some stiff competition -- older brothers NT and Windows 2000. How can Microsoft compete against itself? The company plans to pitch the idea that Windows Server 2003 is the ideal product for cash-strapped firms that need to upgrade.

Microsoft Corp. may have high hopes that the launch of its newest operating system, Windows Server 2003, will inspire enterprise customers to upgrade.

In San Francisco this week, Steve Ballmer, Microsoft's chief executive officer, was pitching the product as a platform that will help companies do more with less. But it will take more than marketing to persuade customers who don't already have migration plans to move up to the latest version of Redmond's flagship operating system.

"NT is doing the job, so there is not a clear need to upgrade," said Matt Krieger, associate director of global network architecture services at Reader's Digest Association Inc., based in Pleasantville, N.Y. "What it takes to get us off [of NT] is a business driven upgrade or a hardware refresh."

Dan Kusnetzky, vice president of system software research at International Data Corp., a Framingham, Mass., market research firm, said that customers aren't moving because they are honoring the golden rule of IT. "That is, if it ain't broke, don't fix it," he said.

Ballmer presided over the Windows Server 2003 launch event, which featured a handful of partners offering support for the software, as well as some early customers.

At the same time, other vendors rushed to acknowledge the platform. Citrix Systems Inc. released a new version of its MetaFrame XP Presentation Server and its MetaFrame Conferencing Manager.

Digex Inc. immediately said it would add Windows Server 2003 to its line of hosted services.

And Oblix Inc. said it would integrate its identity management services with the server platform, too.

Most IT executives are happy to wait patiently and avoid the hype that accompanies product launches. Curtis Muldrew, director of technology infrastructure at Smith & Nephew, a medical supply company with U.S. offices in Andover, Mass., said that his company has yet to evaluate Windows Server 2003. "We know it's launching, but we wouldn't deploy it anyway until it had a few service packs," Muldrew said.

Muldrew said that his company is moving off of NT and onto Windows 2000 Server. He said he feels no pressure to upgrade, and that every organization has to make its own decision about how it's going to handle operating system migration.

"The only thing you need to be concerned about is when the vendor is planning to discontinue support for the product," he said. "Otherwise, you have to assess your needs according to what's going on in your own organization."

Microsoft has said that nearly half of its customers are still running some NT, and most of them have good reason to do so. Either the mission-critical application they have running won't work on Windows 2000 or Windows Server 2003, or it needs some support or device that was never ported.

"The customer may be looking at the cost to change as being much higher than the cost to leave [it] as it is and deal with the support issues," Kusnetzky said.

Other customers have a life cycle, and they amortize their technologies over a certain time period. When that's over, they leave the products in and don't touch them. There are also plenty of secure government environments that have long-term technology plans. Microsoft's NT may be only a tiny piece of that environment.

Microsoft's strategy to fight customer inertia is to build a case that the new operating system platform is a money saver because it has better performance, is more reliable and is more secure. Microsoft will pitch it as a platform that will allow IT executives to be more effective with reduced staff.

Indeed, IDC says that hardware and software costs combined are only about 20% to 25% of a system, and that the remaining costs involved are expenses associated with staff, operations, development, training and retirement.

"If Microsoft can show that this new product will result in a net reduction of staff, they may be able to sell the business managers on the reduction in cost," Kusnetzky said.

Some companies may be happy with what they've got, and others may be reluctant to move to Microsoft's new licensing programs, he said. But it's early in the game, and not enough time has passed for Microsoft to prove its case.


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