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Weekly Column

What's in a Name?: Why Windows 2000 Means More Than You'd Guess

Status: [CLOSED]
By Robert X. Cringely

The most extensive literary criticism comes, not in college literature classes, but in revival tents and on late-night TV. It's the evangelists I'm talking about, those folks who tear apart the words of some biblical passage to make a particular moral point before passing the basket or asking viewers to sendcontributions. I love those analyses, primarily because what they are inevitably analyzing is not the Bible, per se, but rather the decisions of some particular translator or re-translator. At least Torah scholars are working with the original text. So it's in this same spirit of late-night televangelism that I now propose to get a 1,500 word essay solely from the expression "Windows 2000."

Remember, I am a professional. Don't try this at home.

Since Microsoft is the single most important company in the computer industry, and since Microsoft doesn't usually explain with any honesty or directness what the heck it is up to, there are folks like me who watch for subtle changes of nuance, and try to reckon what this means for Microsoft's corporate course. In the case of Windows 2000, it means plenty. It means more of the same behavior from Redmond, but also an acceleration of the rate at which they'll be dipping into all our pockets. This is not entirely good news.

The news, if you missed it this week, is that Microsoft will be giving a new name to Windows NT 5.0, which will now be called Windows 2000. There will be three versions of this product, up from two presently, and they will be at slightly revised price points. This is all aimed at the business market, of course, but I think the most interesting aspect of it is how it is likely to affect home users.

We have a number of things going on here. First, there is Microsoft's general frustration with the market penetration of Windows NT. It's a billion dollar business, true, but you have to keep in mind that for Microsoft, any market share significantly less than 100 percent is cause for concern. You can't be a good monopolist unless you have a good monopoly, and Microsoft doesn't have a monopoly on server and workstation operating systems.

So Windows 2000, as described this week by Microsoft VP Brad Chase, is intended to match more closely the needs of business users, and thereby gain market share. Unix continues to vex Microsoft, as does Netware, which Microsoft officially ignores in rather the same way that we declared the Vietnam War to be a "success" back in 1973. Note that there is already a Netware 5.0, so by not changing the name of NT, Microsoft could be perceived as playing catch-up. But by repositioning NT, adding a super-high-end server version and making the old server version somewhat cheaper, Microsoft thinks it will gain market share. And it will probably work.

The decision to go with the name Windows 2000 means more than avoiding direct competition with Netware 5.0, though. There's gold in that number 2000.

The single most important job of the CEO of every public company in America isn't solving customer problems, delivering new products or killing competitors. The single most important job of the CEO is increasing per-share earnings. Admittedly, this is done for the most part by solving customer problems, delivering new products, and killing competitors, but those are just tools for accomplishing the true goal. The people who really count to the CEO aren't customers or employees, but shareholders. And at Microsoft, the single biggest shareholder is the CEO, Bill Gates. So the situation is literally that whatever is good for Bill Gates is good for Microsoft.

What has made Bill G the richest man in the world is finding ways to continually beat Wall Street's per-share earnings estimates for Microsoft. That's what justifies Microsoft's continual increase in share price and Bill's continual increase in net worth. There are only a few ways to really increase per-share earnings and Microsoft does them all. The simplest method is to buy back your own shares, reducing the size of the pool of shares against which profits are accounted. The other techniques are related to customers: You can get new customers or find ways to extract more money from existing customers. Windows 2000 is intended to do both.

The Year 2000 or Millennium Bug, generally referred to as Y2K, is the biggest boon to software sales in the history of computing. In their heart of hearts, every software vendor hopes to use this crisis to sell all new software to every existing customer. Microsoft certainly expects to do this, and hopes in certain markets to go even further and steal market share. The name Windows 2000 is an instant reminder of this situation and tacitly says to consumers that this product is Y2K compliant. Expect in the months ahead to see lots and lots of software packages renamed with the number 2000. The wonderful thing for these vendors, including Microsoft, is that they can't be easily blamed for the crisis they are reacting to. This, they love.

So expect an ever-shriller level of marketing as vendors disown their previous non-Y2K compliant versions in favor of new versions.Microsoft will certainly do this because all those Window 3.1X users in the corporate world are vexing. So Redmond, which might have found a way to make Windows 3.1X Y2K compliant is instead allowing Y2K to force its customers to buy new products. And this is why we'll also see another version of Windows 2000 to replace Windows 98. This is good from the perspective that it will bring home users into the 32-bit world, but bad because it will mean their existing 16-bit applications are hosed. Double or triple your software budget for 1999, because you'll need it.

Corporate studies show that about 85 percent of desktop hardware will fail in the year 2000 and probably a third of the software won't make the grade, either, but we'll be strongly encouraged to start from scratch, earning billions for Microsoft and Intel. We'll be told that it is easier to just start over then even to test your current configuration. And we'll be told that it isn't enough to upgrade your own desktop. If your PC is part of a network, the only safe solution is to upgrade everything.

And we'll do it, because we like to buy new stuff and because the new stuff will run faster. Some of us have been on this feeding cycle for 20 years and moving us from an 18 month upgrade cycle to a one-time 12 or 15 month cycle will be almost imperceptible. But to the hardware and software industries, it means a $50-100 billion windfall.

There is another reason why Microsoft will drop Windows 98 in favor of Windows 2000. What is their alternative? They can't use the name Windows 98 forever and continuing to follow the current naming scheme would require a Windows 00. It's a wonderful name, actually, but Microsoft simply doesn't want to be saddled with customers referring to "Windows Oh-oh," or my personal favorite, "Windows Uh-oh."

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