April 7, 1999
Microsoft Alters Its Windows Strategy,
Hinting It May Release Underlying Code
By a WALL STREET JOURNAL Staff Reporter
LOS ANGELES -- Microsoft Corp. announced a sharp strategy shift in
its operating systems for consumers, and hinted it might take the radical
step of releasing the underlying programming code for its long-awaited
Windows 2000 operating system.
Steve Ballmer, Microsoft's president, told a gathering of hardware
executives here it will release a consumer operating system next year
based on its existing Windows 98 software. The company had said that it
would phase out that software line in favor of a unified product line based
on the code found in Windows NT and the coming Windows 2000.
The strategy shift comes at a price, because
maintaining multiple software technologies
requires additional engineering and increases
customer support costs.
Separately, Brian Valentine, the vice president in charge of completing
Windows 2000, said the company is "seriously considering" publishing the
source programming code of the "NT kernel," the core of the software.
Opening source code allows programmers outside a company to help
improve its technology.
Though Microsoft may not follow through, even considering the
open-source idea is significant. The software giant has been fiercely
protective of its intellectual secrets and has scoffed at use of the technique
by others. Examples of open-source software include the Linux operating
system, which competes with Windows NT, and Internet software being
developed by America Online Inc.'s Netscape unit.
Comfort Level
Mr. Ballmer said corporate customers have told the company "there's a
level of comfort if they have the source code, just in case."
Microsoft Family Tree
DOS
The original operating system for IBM-compatible PCs, introduced
in 1981.
Windows
Software that adds visual commands to DOS, announced in 1983.
Became popular after 3.0 version in 1990.
Windows NT
Microsoft's most powerful operating system, designed for desktop
machines and servers. Introduced 1993.
Windows 95
A mainstream PC operating system that no longer requires DOS,
introduced in 1995.
Windows CE
An operating system designed for handheld PCs, TV set-top boxes
and other markets beyond desktop PCs, introduced 1996.
Windows 98
The successor to Windows 95, targeted mainly at consumers and
small businesses. Introduced 1998.
Windows 2000 is vital to the company's efforts to penetrate more deeply
into corporate computing, particularly in the large server computers that
run mainstream business applications and high-volume Web sites. Mr.
Ballmer said the company expects to ship a finished version of Windows
2000 by the end of the year, or about 18 months later than originally
planned.
But such dates have been a moving target. For example, Microsoft said in
a news release Wednesday the third beta, or test, version of the software
will be available April 21. Later, Mr. Valentine said the date is likely to be
closer to April 30.
Mr. Ballmer acknowledged the delays have increased opportunities for
competitors, such as Hewlett-Packard Co., International Business
Machines Corp. and Sun Microsystems Inc., which make computers
based on the Unix operating system.
'Not a Panic'
"Every day you're not shipping is a day people can buy something else," he
said in an interview. "It's not a panic. But if you ask me, 'Would I love to
have Windows 2000 today?' Yes, I'd love to have it."
While a radical step, Microsoft suggested an open-source version of
Windows 2000 fits its philosophy of constant improvement based on
customer suggestions. "We don't have a problem putting the source code
out there if we get some feedback," Mr. Valentine said. "If Linux is
popping up, ... we're going to study the heck out of it. If Windows is not
appropriate, we're going to go make Windows appropriate."
Opening up Windows in various ways has already been discussed by
government lawyers and others considering ways to curb Microsoft's
power and end its antitrust trial. "I'm really curious to know how real this
idea is," said David Readerman, a partner at Thomas Weisel Partners, a
San Francisco merchant bank. "It has the potential to totally restructure
Microsoft's business relationship" with PC makers.
Microsoft's original plan to unify Windows 98 and Windows 2000 was
considered a milestone that would eliminate all the original code from
DOS, the operating system that first made the company's fortune. The
struggle to complete Windows 2000 also affected that plan.
Some Features Curtailed
Mr. Valentine said the Windows 2000 team had curtailed development of
certain features that would be needed in any consumer version, and left in
others that consumers might not want. For example, the version intended
for business users requires a security log-on each time a computer is
started.
David Cole, the vice president in charge of the consumer Windows effort,
said customer surveys showed more interest in compatibility with existing
software than in the increased reliability promised by Windows 2000.
Microsoft will release an updated version of Windows 98 this fall,
followed by a more-significant new consumer product based on the same
underlying code in next year's holiday season, Mr. Ballmer said. Current
Windows 98 users will pay $19.95 for this year's update of Windows 98;
those upgrading from earlier versions of Windows will pay $89, Microsoft
said.
Mr. Ballmer also demonstrated a new server "appliance" developed with
Intel Corp. The device, which is expected to be sold for under $2,000, is
intended for small businesses seeking to share files, printers and Internet
access among several computers.
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