Longhorn and the Linux long-game

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• Longhorn

Cath Everett ZDNet.co.uk

Published: 09 Mar 2005 12:20 GMT

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Van Tan, however, believes that neither vendor is likely to emerge as the dominant player. "It's not a question of who is going to win the war as neither of them are going to disappear in the next 10 days. The important question is what the balance between the two companies will be and we think it will be closer to 50-50 or maybe 45-55."

At the moment, he says, Microsoft with its .Net infrastructure "is still the challenger", but how this might change is very difficult to forecast into the future.

Nonetheless, there is a third — and currently more pressing — business reason as to why Longhorn is a crucial product for Microsoft, and that relates to revenues.

Macehiter explains: "One of the biggest challenges that Microsoft faces, and it's something that Gates has admitted, is the competition provided by its own installed base. Microsoft has to provide customers with compelling reasons to upgrade and that means increasingly getting them to sign up to the Software Assurance scheme because it provides it with predictable revenues."

Software Assurance is a software maintenance programme by which mainly enterprise customers pay a set annual fee and receive upgrades without having to pay extra as part of the deal.

The issue is, however, that, while such contracts last for three years, Microsoft released its last desktop version of Windows for the desktop, XP, in October 2001, and its last server product, Windows Server 2003, in April 2003.

As a result, points out Annette Jump, a principal analyst at Gartner: "Many of the support deals run out in 2006, so Microsoft can't really stretch the gap any more as it would start to have an effect."

While this is not so much an issue with small businesses, it an important consideration with mid-sized and large customers, she explains, because "they assume that they'll at least get something new. But if they don't feel they've had much value over the last three years, the danger is that they won't renew their enterprise agreements".

This feeling is particularly marked in Europe, she adds, which, over the last six to nine months, has led Microsoft to try and "add value through initiatives such as training and support to persuade companies to sign up again and in some cases, it's even been reducing prices".

Therefore, Microsoft will hit its 2006 deadline to ship the desktop version of Longhorn at any price, followed by the server version in 2007. According to Quirk, the client release is expected to appear in the second half of next year, and the server edition a year later.

But as Macehiter concludes: "Microsoft has been deliberately vague on what's in Longhorn and what's not. To hit its dates, it doesn't want to commit to functionality, and it will compromise, drop or reduce the scope of that functionality if it impacts on its ability to deliver. It's a very important issue for Microsoft and it's being very pragmatic about it."

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