Date: Mon, 14 Feb 2000 10:33:32 +0100


Computergram 


+ Anxiety Over Windows 2000 Sparks Fresh Market Concern

By Gavin Clarke 

Anxiety over the rate of customer Windows 2000 adoption and 
renewed concern about integration of Microsoft's latest 
operating system with other vendors' products pushed the 
company's share price down on Friday rounding off a miserable 
week for the newly out-of-favor company. 

Microsoft Corp's shares fell nearly 6% to close down $99.93 on 
Friday as financial institutions and analysts, lobbied heavily 
by Microsoft and previously optimistic about the new operating 
system's future, received a report from Gartner Group that 
highlighted the analyst's ongoing concerns about Windows 2000. 

This drop means Microsoft shares have fallen nearly 10% since 
Wednesday when the European Union announced an investigation 
into Windows 2000. The EU is concerned at growing integration 
between the operating system and other Microsoft products, and 
news of the probe sent shares down 3.41% to $106.18. 

Dell Computer Corp's Michael Dell also helped intensify doubts 
over Windows 2000 this week when he said the Linux operating 
system could be considered an alternative to Microsoft's 
Windows and there had been no rush of corporate customers 
upgrading hardware systems to support Windows 2000. 

Gartner said on Friday that up to half of customers who 
installed Windows 2000 in the next two years would could 
experience compatibility problems with their old software 
because of the operating system's extreme complexity. Windows 
2000 boast 32 million new lines of code combined with existing 
NT code, plus the debut of new and relatively untried features 
like Active Directory. 

Gartner used the eve of the Windows 2000 launch this week to 
repeat warnings that customers should wait several months 
before installing the operating system particularly on large 
centralized computer servers. Gartner has waged a war or words 
on Windows 2000 for more than a year and urged users to delay 
deployment until at least the first service pack has shipped 
which it expects to fix bugs and help stabilize the operating 
system. Gartner's concern appeared justified last week when an 
internal Microsoft memo was reportedly seen which said Windows 
2000 contains more than 65,000 known "potential issues" that 
could emerge as bugs, 28,000 of which it said are likely to 
become "real problems". 

It is feared that caution among potential customers will slow 
Windows 2000 sales and adversely effect the company's revenue 
streams for the coming year, after it was revealed Microsoft 
expected to pull up at least $1.5b in upgrades to the new 
operating system. Gartner said only 20% of desktop Windows 
users will upgrade to Windows 2000 this year and 5% of server 
customers will adopt the operating system. 

Delays in adoption of Windows 2000 would also adversely affect 
sales of related products including Office 2000, Exchange 2000 
and SQL Server 2000. Microsoft is gambling on customers 
adopting these to have the full Windows 2000 infrastructure 
based on integrated management services and Windows 2000 DNA. 
If sales of Office, Exchange and SQL Server are affected, 
Microsoft would be forced to downgrade its revenue expectations 
for the year.