Customers could spur interim Windows XP version

By Matt Berger, IDG News Service |  Operating Systems

Microsoft Corp. will slip out an interim desktop version of its Windows operating system before 2004 under pressure from some customers who signed up for its new enterprise licensing plan, several analysts predict.

Microsoft's current roadmap calls for the next release of Windows for the desktop to appear in the second half of 2004, officials say. That release is code-named Longhorn, and Microsoft has promised to pack a number of new technologies into the operating system that coincide with its Web-based .Net initiative.

However, industry watchers say that Microsoft is poised to miss the deadline for Longhorn, which would leave customers that signed up for its new annuity licensing plan, known as Software Assurance, paying for a product that they may not receive. Those contracts, which last three years, require customers pay an annual fee each year during the life of the contract for access to bug fixes, or new operating system releases.

"If people sign up for Software Assurance and no new (desktop) versions of Windows are made available during the three-year period, there could be some customers that pay but get no value out of it," said Alvin Park, research director for Gartner Inc.

Customers that purchase Windows under Microsoft's Enterprise Licensing Agreement or through other Software Assurance plans pay 29 percent of the cost of Windows on the desktop and 25 percent of Windows for the server each year during the life of the contract. If a customer purchased Windows through Software Assurance in late October 2001, when Windows XP was released, they would be eligible for an upgrade through October 2004.

Microsoft offered customers a discount if they purchased Windows under the new license by July 31 of this year, and Park estimated that at least 35 percent of Microsoft's enterprise customers took advantage of that deal.

At least two analysts say that Longhorn won't actually reach customers until the second half of 2005, and as a result will force Microsoft to release an interim product that it can deliver to Software Assurance customers whose contracts expire before then.

"There's really no doubt about it," said Tom Bittman, vice president and research director with Gartner.

Rob Enderle, research fellow with Giga Information Group Inc., said that "there's every likelihood" that Longhorn won't meet Microsoft's late-2004 deadline. The company is working to add more security to the software and is spending more time analyzing code, which is slowing down the process of shipping new code to customers, he noted.

"If nothing comes out on the desktop during the life of the contract, customers are going to be pretty miffed because they would have bought something that never shipped," Enderle said. "That absolutely could put pressure on Microsoft (to release an interim version)."

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