Customers Not Biting Windows XP Bait

As new legal pressures mount against Microsoft Corp., the company is trying to put the spotlight back on its operating system products. But, so far, customers arent buying.

The Redmond, Wash., company last week rolled out here the latest version of Windows, dubbed Windows XP—a release officials are touting as the most significant since Windows 95.

But beta testers, IT managers and analysts alike say Windows XP appears to be not much more than a minor upgrade and so far seems to offer little beyond Windows Millennium Edition or Windows 2000 Professional. They also voice concern about the dearth of information about how XP fits into Microsofts .Net software services vision.

In addition, IT managers say they are confused about what innovations XP will offer them as business users. Joel Salamone, senior director of technology at The Motley Fool Inc., in Alexandria, Va., said he needs stable software that meets his business needs.

“I dont buy software because its neat or really cool. I buy it because its useful and makes employees more productive. Windows XP appears far more consumer-focused, and Im certainly not going to approve another upgrade that offers additional photo, music and video features,” Salamone said. “Moving from NT to Windows 2000 was a no-brainer, but I need a compelling reason to move to XP, and so far I havent seen one.”

The Motley Fool—which has some 500 desktops and 350 servers, 85 percent of which run Windows—was an early adopter of 2000. That shift was successful and helped improve enterprise availability and reliability. “But we just dont need all the bells and whistles that Microsoft is touting in XP,” Salamone said.

For others, such as Price Givens, vice president of application development at Buy.com Inc., in Aliso Viejo, Calif., theres no reason to rush to upgrade. “Another desktop upgrade is not at the forefront of my mind,” Givens said.

Buy.com has more than 200 desktops and some 240 servers, all of which are running Windows 2000. “We have no immediate plans to upgrade. Windows 2000 on the desktop is meeting our needs and, while I will look at XP and see if its compelling, Im in no hurry to change,” he said.

Microsoft is clearly aware of the need to build mind share, especially if XP is to help Windows maintain its dominant position in the operating system market. In fact, its one reason the company felt it necessary to rush the launch, showing XP as a feature-incomplete beta.

Nevertheless, corporate disinterest in XP could be a bad omen for the other Microsoft offerings coming to market this year. Office XP, the next version of the desktop suite, is scheduled for release by June, and the next version of the Windows server is due by years end.

Adding to the companys distraction is the Department of Justices scrutiny of whether Microsofts recent $135 million investment in Canadian software company Corel Corp. reduces competition in the market for business software.

This latest legal challenge, which the DOJ confirmed last week, comes at the same time Microsoft is appealing District Judge Thomas Penfield Jacksons order of last year to split the company in two. Antitrust expert Bill Kovacic, a professor of law at George Washington University, in Washington, said it appears that the attorneys general from the various states will also be examining the Corel deal.

The government and the states could also try to use the Corel investigation in their oral arguments before the U.S. Court of Appeals in Washington this month to prove that Microsoft is continuing its campaign of “manifest destiny” and that the Corel deal is the latest evidence, Kovacic said.