Is Unscheduled Win XP Update in the Works?

Microsoft will slip out an interim desktop version of Windows before 2004 under pressure from some customers who signed up for its licensing plans, 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. 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. That would leave customers that signed up for its new annuity licensing plan, known as Software Assurance, paying for a product they may not receive. Those three-year contracts require customers pay an annual fee during the life of the contract for access to bug fixes, or updates.

Expectant Customers

"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.

Customers who buy 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 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. 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. As a result, Microsoft may be forced to release an interim product to give Software Assurance customers whose contracts expire before then.

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

Rob Enderle, research fellow with Giga Information Group, said "there's every likelihood" that Longhorn won't meet Microsoft's late-2004 deadline. The company is adding security and spending more time analyzing code, which is slowing down the update process, 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.

No Deviation

A Microsoft spokesperson was firm that the company won't ship a desktop Windows product that isn't already on its roadmap.

"There's no plan for anything to come out before the next version of Windows, which is Longhorn," said Jim Cullinan, group product manager with Microsoft's Windows division.

Microsoft has a history of delaying Windows releases. The Windows .Net Server 2003, originally scheduled to ship about six months after Windows XP, has been twice delayed and is now due to customers in early 2003.

After promoting the Blackcomb Windows XP update, Microsoft replaced that project with Longhorn and pushed it out a few years, company executives say.

Partners could pressure Microsoft to release a desktop Windows upgrade in the next year or two, before Longhorn. Enderle noted that Microsoft typically updates Windows along with Office. Microsoft plans to release Office 11 next year.

"New versions of Office don't move particularly well unless there is a new operating system," Enderle said. Also, vendors typically like software updates to accompany new PCs for the holiday shopping season or back-to-school rush, Bittman noted.

An interim release would probably mirror Microsoft's strategy with Windows 98 Second Edition, say the analysts. That would mean a Win XP successor would include security updates and some feature enhancements, such as an updated media player. A second release of Windows XP could update the OS to the next release of Microsoft's SQL Server database, code-named "Yukon," Enderle said.

While Microsoft held strong to its statement that Longhorn will be its next release, in late 2004, Bittman questioned the company's intentions. "Perhaps Microsoft has to be careful to say there will be another release coming in less than three years in order to drive license sales," he said.