AssetMetrix released a report Tuesday showing that Windows 2000 installations have declined by only four percentage points to 48 percent of existing installations in the first quarter of 2005, down from 52 percent in the fourth quarter of 2003.
AssetMetrix Research Labs is the technology and market research arm of AssetMetrix Inc. of Ottawa, Ontario, which provides IT asset management services.
Windows 2000 is "at the inflection point" of being replaced by Windows XP as large corporations upgrade their PC inventory, and as the introduction of the Longhorn version of Windows approaches in late 2006, according to the AssetMetrix report.
But Windows XP has already become the most popular operating system for companies with fewer than 250 PCs, according to the companys technology and market research arm.
This isnt surprising because smaller companies tend to gravitate sooner to the latest operating systems, said Steve OHalloran, managing director of AssetMetrix Research Labs. This may be mainly because they tend to turn over their desktop hardware faster as they hire new employees or because they dont have an extensive IT support department that would tend to maintain older machines for longer, he said.
When it comes to midsized companies with at least 2,500 PCs, Windows 2000 may already be running neck-and-neck, with XP taking a dominant position in this segment by the end of the year, he said.
XP could very well be catching up with Windows 2000 in large corporations by the end of the year, OHalloran said. "It will be a horse race overall by Christmastime," with Windows XP running neck-and-neck and possibly overtaking Windows 2000 by years end, he said.
"Larger companies have held back due to either management, security or business-critical situations," OHalloran said. Security was the main concern for large organizations in the time before the release of Windows XP SP2, he said.
It also has taken time for companies to resolve application compatibility issues with Windows XP, he said. Some companies have shied away from XP if they werent prepared to do the compatibility testing and the subsequent upgrades that would have been required, he said.
Another issue was the sheer effort required for a large company to undergo a major new operating-system upgrade, he said. "Large companies are like large battleships—these companies just cant turn on a dime," OHalloran said.
Planning for the replacement of Windows XP may take on more urgency with Microsoft planning to start cutting back on Windows 2000 support after June 30. After this date, Microsoft will longer accept requests for changes or new features for Windows 2000. Automatic updates and patches for Windows 2000 will continue until the end of June 2007.
XP installations in larger organizations may start to build momentum as they gain confidence about SP2s effectiveness in resolving security concerns and as they start to replace Windows 2000 machines.
The XP increase was mainly at the expense of surviving Windows 95 and 98 machines, which declined from 28 percent at the end of 2003 to less than 5 percent in 2005, according to OHalloran.
At this point "most companies have wiped out their Windows 9x installations and moved to a mix of Windows 2000/XP," he said.
Its also likely that the surviving NT installations will be the first to be replaced over the next six months by XP, followed by further erosion of Windows 2000 installations, OHalloran said.
Given how the great success of Windows 2000 on corporate desktops has resulted in the slow adoption of XP, OHalloran said the adoption cycle for Longhorn also will be prolonged even if it arrives by late 2006, as currently scheduled.
"Large companies are not likely to even start looking at Longhorn until the spring of 2007," OHalloran said. Their attitude will be, "Lets give this operating system a shake to see how stable" it is, he said.