Investors consider Windows 2000 impact
By Dawn Kawamoto
Staff Writer, CNET News.com
February 16, 2000, 4:30 p.m. PT
This week's release of Windows 2000 could be considered the tech
industry's equivalent of trickle-down economics as many segments will
reap the rewards.
When the new operating system reaches store shelves this week, Microsoft
will not be the only company to enjoy a boost in revenues. A large
cross-section of tech companies--computer makers, memory sellers, software
creators and others--also are hoping to ride Microsoft's coattails to the bank.
The long-awaited, much delayed new operating system for businesses finally
gets its official launch tomorrow. Microsoft chairman and chief software
architect Bill Gates will culminate three-days of keynotes with his own speech
in San Francisco.
Although a Windows 2000-related pop is almost
guaranteed for many companies, the question is,
"When will it occur and how big will it be?"
The answer depends on the type of
company--software or hardware, for example, and
whom you ask.
On the hardware side, "The stocks might start to react in late February or
early March," said Dan Niles, an analyst with Robertson Stephens. "That's
when we should start to hear from the box makers and chipmakers on
whether they're seeing a pickup in sales because of Windows 2000."
But some analysts question whether these companies will gain a significant
boost from the new OS.
"Investors want to believe that the (operating system) matters, but there is
weak evidence that PC shares perform a little better than they otherwise
would after the OS release," said Kurt King, an analyst with Banc of America
Securities.
Nonetheless, computer makers, semiconductor companies, software vendors
and component suppliers are all expecting some benefit from the release of
Windows 2000 as corporate buyers begin upgrading their systems to the
more robust system.
Compaq, Dell and IBM are expected to be the first in line to receive any
upside from Windows 2000 because they are leaders in corporate desktop
sales, Niles said.
Some computer makers, such as Hewlett-Packard and Gateway, have already
gotten a jump by selling systems loaded with Windows 2000 before
Microsoft's official launch, which is scheduled for tomorrow.
Microprocessor giant Intel and Micron Technologies, a memory chip leader,
also are expected to reap some benefits. The companies are the largest
players in their respective markets.
Twenty percent of corporate desktops
are expected to ship with Windows
2000 by the end of the year and that
figure is expected to rise to 40 percent
in 2001, Niles said.
But Windows 2000 server sales are
expected to be slower, as corporate IT
managers test and retest the systems
before deploying them, Niles added.
Some analysts believe sales will not
pick up until the second half of this
year because the first "service pack,"
which is designed to fix bugs, will not
be available until June.
Meanwhile, the Gartner Group
recently released a report stating that
25 percent of potential customers may
encounter problems when upgrading
to Windows 2000, which may also
slow sales.
"We don't know the pace that the architecture will be adopted," said Kevin
McCarthy, an analyst with Donaldson, Lufkin & Jenrette. "My guess is a
segment of the population will move quickly to adopt it while a
large number will kick the tires."
Adding to the uncertainty is that history does not serve as a good
guidepost.
Analysts say Windows NT 4.0, for example, is not a good barometer
of what's to come with Windows 2000--formerly called Windows NT
5.0.
When Windows NT 4.0 debuted in July 1996, the semiconductor
market was facing tough times and computer makers were in the
early stages of fighting the sub-$1,000 PC battle.
As a result, PC and chip stocks were struggling in a far more difficult
environment than today, Niles said.
Related news stories
• Windows 2000 launch festivities begin February 15, 2000
• Windows 2000 signals new era for Microsoft February 14, 2000
• IBM preps Windows 2000 notebooks February 10, 2000
• Windows 2000 at "core" of Microsoft strategy February 3, 2000
• Microsoft prepares fixes, updates for Windows 2000 January 26,
2000
• Windows 2000 arrives ahead of schedule January 24, 2000
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