Windows 2000: Upgrades vs. New Deployments

Windows 2000: Another upgrade, or a new, robust platform? Microsoft bets that advertising will tip the balance.

January's launch of a $220 million, 1-year advertising campaign loudly signaled Microsoft's intention to accelerate Win2K's rate of adoption. Tacitly acknowledging the company's disappointment, Mike Delman, Microsoft's general manager of advertising and events, announced the new marketing plan and suggested that marketing efforts lagged behind the success of the platform's production and delivery. Dwight Davis, an analyst with Summit Strategies, agrees that Microsoft's preaching of the Win2K gospel lacks vigor, given the importance of and investment in the product.

The new focus on marketing comes as users question whether Win2K will languish primarily as an upgrade for existing Windows NT or Windows 9x installations, or become a robust platform that lets Microsoft extend its reach into the corporate IT market. To date, research finds no significant Microsoft inroads into the high-end server market that Sun Microsystems dominates.

An exclusive analysis of data provided by Survey.com reveals a complex picture of the driving force behind the Win2K upgrade. Graph 1 compares the percentage of the Win2K rollout generated by upgrading current installations to figures representing new deployments in enterprises that are currently installing or have completed their installation of the new OS.

Clearly, most Win2K deployments involve upgrades, but new deployments comprise about 30 percent of Win2K business in server and desktop arenas. We don't know whether the new deployments replace Sun, Linux, or other competing platforms or represent completely new installations.

Unfortunately for Microsoft, companies with pressing needs for new deployments were the first to adopt Win2K. Once the pent-up demand for new systems has been satisfied, the urgency to continue moving to Win2K could subside. Graph 2 compares upgrades and new deployments among companies that are just starting their Win2K rollouts. For this group, Win2K upgrades have outstripped new deployments by more than 3 to 1.

Because Win2 adoptions fall primarily into the upgrade category, have related upgrade costs, particularly those involving hardware, dragged down Win2K's adoption rates? Survey.com data answers no—for most companies. Graph 3 shows the percentage of desktops that require hardware upgrades for the Win2K upgrades in companies that are currently deploying or have completed their Win2K deployments.

About 10 percent of companies required hardware upgrades for 80 percent or more of their desktops, but more than one-third of the companies needed to upgrade only 20 percent or fewer of their desktops.

As Graph 4 indicates, the numbers are similar for companies starting their Win2K rollouts. Once again, only about 10 percent of the companies need to upgrade 80 percent or more of their desktops. More than 25 percent of the organizations must upgrade 20 percent or fewer of their desktops.

Overall, this data indicates that the Win2K deployment has been primarily an upgrade process unaffected, in most companies, by associated upgrade costs. Companies have upgraded to Win2K according to other internal considerations.

With that in mind, perhaps Microsoft's new marketing campaign can convince IT managers to use Win2K for new applications as well as those that already run on the Windows platform.