Ballmer: Windows Server 2003 does more with less

Microsoft CEO Steve Ballmer officially launched the company’s long-awaited and thrice delayed Windows Server 2003 operating system Thursday, claiming it is the right product for businesses that want to “do more with less” in these tough economic times.

SAN FRANCISCO – Microsoft CEO Steve Ballmer officially launched the company’s long-awaited and thrice delayed Windows Server 2003 operating system Thursday, claiming it is the right product for businesses that want to “do more with less” in these tough economic times.

Customers are in “a real tight jam” because of the sagging economy, Ballmer said. “But customers still want to do more. The challenge is not just cost reduction. The challenge is for people to be able to do more with less.”

Bring in Windows Server 2003, a major new release of Microsoft’s operating system software for server computers, launched at many events around the world Thursday that attracted more than 200,000 people, according to Microsoft.

“This is one of the most significant pieces of work we have ever done and certainly the most significant piece of work we have done in terms of IT professionals and the data center,” Ballmer said, speaking in San Francisco’s Bill Graham Civic Auditorium.

In his trademark energetic presentation style, Ballmer summed up enhancements to reliability, manageability, scalability, information sharing and collaboration in the new server software. Addressing a key area and a long time Microsoft weakness, Ballmer said “security is tattooed on our brains,” referring to Microsoft’s software programmers.

Windows Server 2003 has undergone code reviews, includes a new software update service and comes with a newly built IIS (Internet Information Server) Web server, among other security enhancements. IIS is one of the most vulnerable parts of previous Windows server versions.

“I can’t say there will be no (security) issues; there will be fewer issues and we have built better technologies to help you respond to the issues that do in fact come about,” Ballmer said.

The Microsoft executive also made a pitch to Windows NT 4 users to upgrade. Windows Server 2003 reduces downtime by a factor of eight over Windows NT 4 and offers double the performance, among other advantages, he said. More than a third of Microsoft’s server installed base still consists of systems running NT 4.0, despite the vendor’s efforts to get users to upgrade, research firm IDC said recently.

Cigna plans to use Windows Server 2003 as part of its IT cost reduction efforts, said Jeff O’Dell, chief technical architect and vice president of technology planning and architecture at the Philadelphia employee benefits provider.

“Just by adding Windows Server 2003, we think we can reduce the number of physical servers we have by 25%,” O’Dell said in an interview at the Microsoft launch event. Cigna has some 3,000 servers, about 800 of which are in a data center and the others spread across the company’s various worldwide locations, he said.

Cigna is not about to replace all of its current server software, which includes Windows NT 4 and Windows 2000 as well as products from other vendors. “A lot of things need to happen before we can move over. Our intention is to be patient but as aggressive as we can. Server consolidation will be a key element in driving down our IT cost,” O’Dell said.

“We will be careful with the adoption and do it on a case by case basis where it makes business sense,” Ben Flock, vice president of application frameworks and virtualization at Cigna said.

Windows Server 2003 is “an order of magnitude” more reliable than Windows Server 2002, according to analysis firm the Yankee Group, which calls 2003 a “banner year for Microsoft and its corporate customers” with a raft of major new product introductions. Later this year the company plans to introduce Office 2003. On Thursday it also launched Visual Studio .Net 2003 and a 64-bit version of SQL Server Enterprise Edition, its database.

However, with corporate buyers curtailing spending, Microsoft has to make the case that Windows Server 2003 is worth expending funds on, said Rob Helm, research director at Directions on Microsoft, an independent research firm focused on Microsoft strategy and technology. Reliability and security are important parts of that case, he said.

“Windows Server 2003 has gone through a more rigorous development process. And just the fact that some features are turned off out of the box make it a harder product to attack,” Helm said.

Combined with new Intel processors and computers built by vendors such as Unisys, Windows Server 2003 presents tough competition for Unix server vendor Sun, according to Helm.

“It gives Microsoft a very big stick to beat Sun with,” Helm said. “Microsoft and its hardware partners can go after very large-scale server deployments. Windows Server 2003 alone does not change the competitive landscape. Along with trends in the hardware market it could have some serious impact on competing server vendors.”

Even with all the enhancements, adoption of Windows Server 2003 won’t be dramatic, said Chris Le Tocq, an analyst with Guernsey Research of Los Altos, Calif.

“This is replacing Windows 2000, which has been shipping in various iterations for about four years. One of the things with adoption especially of a server operating system is that corporations don’t change quickly. For a lot of people Windows 2000 is now a known quantity,” he said.

Le Tocq expects slow but steady adoption, with most users signing on because they buy new hardware. In the short term between 6% and 7% of newly sold servers will likely come with the new Windows operating system, Le Tocq forecasts.

Le Tocq’s expectation is guarded. The Yankee Group in a recent survey of 1,000 current Windows server users found that 34% of current users plan to switch, and of those 37% hope to do so in the coming 12 months.

Martyns Kanu, a systems engineer and network specialist at the San Mateo County Community College School District attending the San Francisco launch event, said he is looking at upgrading the 15 systems running Windows 2000 Server at his organization’s three campuses in the San Mateo, Calif., area.

“But we are not upgrading yet, I think it will take at least six months; we do not want to rush it,” Kanu said.

Windows Server 2003 is available worldwide now in four versions: Datacenter Edition, Enterprise Edition, Standard Edition and a Web Edition. The version for small businesses will ship in “a few months,” Ballmer said. Support for 13 languages is available now, with more language versions due out the next month or so, Microsoft said.

Pricing for the product is based on a server and CAL (client access license) model similar to that of Windows 2000. Two types of CAL are offered, allowing an organization to count either end users or devices. A server license for the Enterprise Edition is $2,288, with the user CAL and device CAL each priced at $29, the company said. The Standard Edition of the product is priced at $704. An External Connector license (which is the new name for the Internet Connector license) is $1,960.