from the Wall Street Journal 

   [Tech Center]
   October 28, 1998 [Tech Center]
   
Microsoft's Windows 2000 Portends
Convergence for Operating System

   By DAVID BANK 
   Staff Reporter of THE WALL STREET JOURNAL
   
   SAN FRANCISCO -- Microsoft Corp. changed the name of a long-awaited
   upgrade for its Windows NT operating system to Windows 2000, outlining
   aggressive marketing plans for a product that isn't expected to hit
   the market for another year.
   
   The name change, announced at a news conference here, underscores
   Microsoft's long-term plan to combine two major technology strains
   into one. The Windows NT line, long focused on business users, will
   eventually produce a successor to Microsoft's Windows 95 and Windows
   98 operating systems, based on different technology and mainly
   targeted at home users.
                                                                         
   In changing the name of the next business offering from Windows NT
   5.0, Microsoft also continues a strategy of moving from the software
   industry's traditional technical-version numbers to "model years,"
   reflecting a quest to get customers in the habit of buying regular
   upgrades to get the latest features.
   
   Indeed, Microsoft Chairman Bill Gates acknowledges the company
   borrowed the notion from General Motors Corp. chief Alfred Sloan, who
   introduced automobile-model years in the 1920s as a way to encourage
   customers to trade in still-working cars. With its near-total
   domination of the PC-operating-system market, Microsoft's biggest
   competitor is often its own older products. Driving demand for
   upgrades has become one of the biggest challenges as it seeks to
   continue its revenue growth.
   
   The renamed Windows 2000 product line represents a major opportunity
   to increase revenue. Microsoft is positioning its new Windows 2000
   Professional, formerly known as Windows NT Workstation, as the
   operating system of choice for business users rather than Windows 98.
   Microsoft, which charges roughly twice as much for NT Workstation
   compared with Windows 98, claims to have sold 20 million NT
   Workstation licenses.
   
   The announcement is further confirmation of the coming end to the
   Windows 98 technology line, which began with MS-DOS and continued
   through Windows 3.1. Microsoft's next consumer operating system will
   be based on the same software code as the NT line. At that point,
   Microsoft operating systems for business and consumers will all be
   part of a single product line carrying will have a single product line
   carrying the tag line, "Built on Windows NT technology," said Brad
   Chase, Microsoft's vice president of marketing.
   
   "It's mainstream for business today, and it will be mainstream for
   consumers tomorrow," Mr. Chase said at a press conference in San
   Francisco.
   
   Microsoft executives consider Windows 2000 the company's most
   important new product of the decade and its best bet to capture all
   but the biggest corporate-computing jobs, including those now handled
   by mainframe computers or servers running variants of the Unix
   operating system. For the high end of the market, the company
   announced what it calls the Datacenter edition, which will be able to
   run computers using up to 16 microprocessor chips. That version will
   be released two to three months after the rest of the product line,
   Mr. Chase said.
   
   "We're not going to claim we're going to replace everything in the
   data center," Mr. Chase said. He said many companies would add Windows
   2000-based computers to work with their existing machines.
   
   Microsoft announced other configuration changes that could have the
   effect of driving customers to higher-priced products. An edition
   called Windows 2000 Server, formerly Windows NT Server, will now only
   support systems with two microprocessors, down from four. Windows 2000
   Advanced Server, formerly Windows NT Server Enterprise edition, will
   support systems with four chips, down from eight.
   
   Microsoft executives said increases in chip power meant many users
   could get by with systems that have fewer chips. In addition, they
   said current users of high-end NT versions will be able to upgrade
   without a price increase.
   
   Mr. Chase declined to be more specific about pricing except to say
   there won't be significant increases from current prices. He also
   repeatedly refused to be pinned down about the release date for
   Windows 2000, which has suffered repeated delays and is running at
   least a year behind schedule. Analysts now expect the product by the
   end of next summer.
   
   "I've been through this before with Windows 95, which was nine months
   late," Mr. Chase said in an interview. "Nobody remembers that. They do
   remember a quality product."
   
   Microsoft executives also took pains to downplay potential problems
   because of the size and complexity of the product, which has grown to
   more than 40 million lines of programming code. By contrast, the new
   version of the competing Solaris operating system from Sun
   Microsystems Inc., announced Monday, has only about 12 million lines
   of code.
   
   In response, Mr. Chase noted that Windows 2000 includes a Web server,
   directory and security services and other features not included with
   other systems.
   
   Mr. Chase said Microsoft conducted focus groups and customer surveys
   before adopting the new name. He said Windows 2000 was meant to
   reassure customers concerned about the year 2000 computer glitch,
   clarify confusion about which system particular customers should buy,
   and "infuse NT with the Windows brand name."

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