Predicts 2004: Client-Side Windows Adoption

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1 Strategic Planning, M. Silver Research Note 1 December 2003 Predicts 2004: Client-Side Windows Adoption Despite security fixes for NT Workstation v.4, you should focus on migrating to newer platforms and securing your desktops in Insulate yourself from the uncertainties of Microsoft's operating-system delivery timing. Core Topic Hardware Platforms: Client Platforms Key Issue How will desktop and mobile client platforms evolve during the next five years? Strategic Planning Assumptions Microsoft will continue to deliver patches for critical security holes in NT Workstation v.4 through year-end 2004 (0.8 probability). Microsoft will not ship a security release for Windows 2000 Professional until three to nine months after Windows XP Service Pack 2 is delivered (0.7 probability). Microsoft will include upgrade rights with Windows Professional original equipment manufacturer licenses by year-end 2006 (0.6 probability). Microsoft's next version of Office will require Windows Longhorn (0.6 probability), just as Office 95 required Windows 95 to run. On a difficulty scale of one to 10, a migration from Windows 2000 or XP to Longhorn will be at least a seven (0.7 probability). It will be at least 18 months after Longhorn client ships before Type B enterprises (mainstream technology adopters) can deploy it in production (0.7 probability). For enterprises, 2004 will be a critical year in their client operating system (OS) deployment strategies. For many, it will be the year they finally eliminate all the Windows 9x and Windows NT Workstation v.4 (NTW4) from their enterprises. For enterprises that have been deploying Windows 2000, we believe 2004 marks a critical juncture where they should stop deploying Windows 2000 and switch to Windows XP, at least for new PCs coming into the enterprise. For others, it may be the year they seriously evaluate Linux for at least some desktop users. Prediction Because of the importance of NTW4 on the corporate desktop, Microsoft will continue to deliver security patches for NTW4. Although the overall installed base of NTW4 is relatively low, it is sizable in Microsoft's most coveted market large enterprises. All support and bug fix creation was supposed to end on 30 June 2003, right around the time the vulnerability that enabled MS Blaster was found. Microsoft delivered patches for NTW4, even though the vulnerability was announced after support officially ended. Eventually, Microsoft announced that it would continue to ship fixes for severe security holes on NTW4 through 30 June We believe it will continue to do so through at least yearend There are a few reasons for this: 1. Microsoft officially supports NT Server v.4 through year-end Because Microsoft will have to fix any security holes on the server through that date, and because the code bases of the server and workstation products are so similar, it will not be that much extra work to test the fixes on NTW4, too. 2. Microsoft has sold custom support contracts for NTW4 to several enterprises, and these contracts run through at least Gartner Reproduction of this publication in any form without prior written permission is forbidden. The information contained herein has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof. The reader assumes sole responsibility for the selection of these materials to achieve its intended results. The opinions expressed herein are subject to change without notice.

2 year-end These customers will demand that Microsoft create fixes for severe security holes. 3. Given Reasons 1 and 2, if Microsoft has written fixes for severe security holes and refuses to give them to the general public, it will be vilified in the press. Microsoft will not risk withholding a remedy for a security hole. However, there are still risks to running NTW4: Even if Microsoft says it will provide security fixes, it is up to Microsoft to decide what is considered a severe security hole. Microsoft could claim that the architecture of NTW4 prevents it from fixing a particular problem. This has already happened in Office 97. Beyond security issues, new applications and device drivers are generally not supported for the older OS, and many independent software vendors have dropped support of the platform as well. Strategic Planning Assumption: Microsoft will continue to deliver patches for critical security holes on NTW4 through year-end 2004 (0.8 probability). Enterprises should continue their migration off old client OSs and target having all users off NTW4 by year-end If all users can't be off by then, enterprises should prioritize users and move the more critical ones off first. Enterprises should not slow down their migrations because Microsoft has continued to deliver security patches. Prediction Microsoft will not plan to ship a security release for Windows 2000 Professional proactively; it will be forced to do so by its customers. The MS Blaster worm proved that many enterprises do not do a good enough job patching their desktops and servers. It also proved that, although patches are being delivered faster, hackers are also creating new exploits faster. We believe that, in the long term, patching is a losing proposition. So does Microsoft. In its recent announcement of security initiatives, it announced service packs for Windows XP and Windows Server 2003 to improve security. Included will be eliminating some communications interfaces that are not generally needed, a new version of the Internet Connection Firewall that will be automatically enabled, and other improvements and changes to settings to make the 1 December

3 OSs more secure. All this is a good thing and will especially help protect many consumers running XP. However, we believe this initiative is lacking when it comes to the enterprise. More enterprise clients are running Windows 2000 than Windows XP. And many more servers are running Windows 2000 than Windows Server Microsoft has said it will deliver the "role-based security configuration" technology planned for Windows Server 2003 Service Pack 1 to Windows 2000 Server and add inspection of Windows 2000 machines for quarantine, but it has not provided any estimation of delivery dates. Strategic Planning Assumption: Microsoft will not ship a security release for Windows 2000 Professional until at least three to nine months after Windows XP Service Pack 2 is delivered (0.7 probability). Enterprises should understand the changes in the upcoming service packs for Windows XP and Windows Server 2003 and prepare their test environments so they can test and deploy them quickly once they ship. We expect that Service Pack 2 will break some applications, so testing will be very important. So far, Microsoft has positioned the security fixes for Windows XP as a service pack, and similar defects exist in Windows Because Windows 2000 is still fully supported, enterprises should demand that Microsoft provide comparable fixes. If Microsoft does not add the same security shielding technology it will have for Windows XP to Windows 2000, enterprises should demand free upgrades and help with implementation. Prediction Microsoft will include upgrade rights with some versions of Windows. Microsoft continues to find itself in a precarious position with its Windows client OS. It wants enterprises to buy maintenance so that Microsoft has an annuity revenue stream. Microsoft wants to deliver rich, feature-packed versions, but the more features it adds, the more difficult it is for enterprises to adopt the new versions. For consumers, Microsoft needs new products more frequently to invigorate its sales and the sales of PC hardware original equipment manufacturers (OEMs). Enterprises want new versions of Windows to come out less frequently, and to have those versions supported longer so that they can standardize. However, enterprises that pay for Software Assurance or Enterprise Agreements have conflicting desires longer life cycles and value for their money (which usually implies more releases). 1 December

4 Although Linux has very little presence on the enterprise desktop today, the threat of Linux on the desktop and Microsoft's own missteps with licensing during the past few years have created a situation where Microsoft needs to do something fairly radical to improve how customers feel about it. Microsoft should include upgrade rights with the Windows Professional OS. Bundling upgrades with Windows Professional would minimize the Linux cost argument enterprises perceive by reducing the acquisition cost advantage Linux has over Windows. Of course, users would still have to pay for Windows when they buy a new PC, and users often buy a new PC to provide the power necessary to get the most out of new OS features, anyway. Furthermore, if Microsoft only includes upgrade rights for users running the Professional edition, it might convince more consumers to buy Professional instead of Home Edition, making up some of the revenue gap. It should be noted that Microsoft used to charge for downgrade rights to run older OSs, but when Windows XP was released, Microsoft included them at no additional charge. Strategic Planning Assumption: Microsoft will include upgrade rights with Windows Professional OEM licenses by year-end 2006 (0.6 probability). Enterprises should make sure all contracts include remedies if Microsoft offers heavy discounts or free software during the contract period. Prediction Migrations to Longhorn (client) will be the most difficult migration since the one from Windows 3.1 to Windows 95. The next version of Windows (known as Longhorn) will probably not ship until Microsoft promises many new advanced features, and, the more Microsoft talks about new features in Longhorn, the more memories of the Cairo OS that was never delivered are invoked. Longhorn is supposed to include: an overlay to the NTFS file system, known as WinFS, to vastly improve searches of file and stores; a new user interface; support for Next-Generation Secure Computing Base (NGSCB, formerly known as Palladium); and a new application programming interface (API) set, known as WinFX. Enterprises will probably need to upgrade many applications when they upgrade the OS. We also expect Microsoft's next version of Office to require Windows Longhorn (0.6 probability), just as Office 95 required Windows 95 to run. The new user interface may force enterprises to consider a rapid migration to Windows Longhorn, much as they migrated from Windows 3.1 to Windows 95. The differences today from 1995 are a much larger installed 1 December

5 base, longer lists of applications that must be tested and upgraded, and more complexity on each individual desktop. The reasons this migration will not be quite as hard as the migration to Windows 95 are that WinFX should be fundamentally more compatible with Win32 than Win32 was with Win16, and IS processes and migration tools, perhaps including the ability to use Microsoft's Virtual PC technology, may be somewhat more mature. Users are also generally somewhat more experienced because of increased PC proliferation into the home. But no matter when Longhorn actually ships, we believe that most enterprises that consider themselves mainstream technology adopters will require at least 18 months before they can start deploying it in production in large numbers. In the past, Gartner would suggest that enterprises wait until Microsoft shipped the first service pack to address initial stability problems before deploying a new OS. Microsoft, of course, would argue that the OS (whichever new OS was being discussed) was stable enough in fact, the most stable ever. But there is much more to the process of bringing in a new OS than stability. Although Microsoft is likely to claim that Windows Longhorn is the most stable and secure ever, enterprises will have to wait until their application vendors agree to support their applications on the new platform. For critical applications, vendor support is usually "a must." With Windows 2000, it took more than 12 months for most enterprises to have a sufficient portion of their applications supported by vendors. Some were still waiting for support three years after Windows 2000 shipped. Strategic Planning Assumptions: On a difficulty scale of one to 10, a migration from Windows 2000 or XP to Longhorn will be at least a seven (0.7 probability). It will be at least 18 months after Longhorn client ships before Type B enterprises (mainstream technology adopters) can deploy it in production (0.7 probability). Acronym Key API NGSCB NTW4 OEM OS application programming interface Next-Generation Secure Computing Base Windows NT Workstation v.4 original equipment manufacturer operating system Enterprises should insulate themselves from the uncertainties of Microsoft's product delivery cycles by adopting a strategy of managed diversity bring in the latest client OS possible on new PC hardware purchases and don't plan to upgrade client OSs on existing PCs. Begin moving from Windows 2000 Professional to Windows XP through hardware attrition. Bottom Line: Enterprises should not be distracted by Microsoft's promises to provide security patches for Windows NT Workstation v.4, or the early glimpses of Windows Longhorn it has provided. The goal for 2004 should be the gradual elimination of older technology like Windows 9x and NTW4. Support is long gone for these versions, and new applications will 1 December

6 not support them. For most, Windows XP should be the replacement operating system. Windows XP should be favored on new PCs coming into the enterprise, and the Windows 2000 Professional installed base should start being reduced through hardware attrition. Microsoft's schedule for delivering new versions of Windows is volatile, and embracing Windows XP, at least on new PCs being purchased, will help insulate the enterprise from this volatility. 1 December

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