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Wednesday, 24 October, 2001, 16:51 GMT 17:51 UK
XP launch crucial for Microsoft
Windows XP launch banner on hotel marquee
Microsoft's high-profile debut is focused on Broadway
David Schepp

Microsoft is pulling out all the stops in promoting the latest version of its Windows operating system, Windows XP, which debuts on 25 October.

With bashes planned in New York and other cities, Bill Gates, Microsoft founder and chairman, is driving home the message that XP is as revolutionary a step in the development of personal-computer (PC) software as the much-vaunted Windows '95 was six years ago.

Microsoft chairman Bill Gates
Bill-ionaire Gates will be in New York for the XP launch
But a soft US economy and wartime concerns may wreak havoc even with Microsoft's best-laid plans.

Consumers are reining in expenses, fearful not only of losing jobs but of renewed terror attacks and continued anthrax scares.

"The economy sucks and most people are going to probably have to buy a new PC to get Windows XP," says AG Edwards technology analyst John Purcelli, adding that most consumers personal computers are just too old.

"It's not an easy upgrade for most consumers."

Critical product

With the Windows operating system (OS) providing the software behemoth with about half its profits, the pressure is on Microsoft for successful product launch.

Microsoft needs to get all [its] customers off old versions and on to this one

John Purcelli, AG Edwards technology analyst
"It's critical because Office and Windows... together make up 100% of their profits," says Prudential Securities analyst John McPeake, referring to Microsoft's business suite of software applications as well as its operating system.

He told BBC News Online, however, that with Microsoft's near monopoly on the PC operating system market, the firm is nearly guaranteed to be successful.

"Almost every PC that ships in the next quarter or two is going to have XP," said Mr McPeake, who rates Microsoft stock a "buy" and believes he is among the most bullish on the company's prospects.

Selling to business

While consumers may migrate grudgingly to Microsoft's latest offering as they purchase new computers, US business will be a much harder sell.

Advertisement outside Manhattan's Marriott Marquis hotel
Adverts everywhere announce the launch date
Many firms are just a few years away from a massive technology upgrade caused by fears over the year 2000.

Billions of dollars were spent to upgrade computers and software to ensure systems would still operate after the calendar swung to 1 January 2000.

Many of those computers purchased to combat Y2K use Microsoft's OS for business, Windows NT 4.0. While a subsequent version - Windows 2000 - has since been launched, NT 4.0 it still a satisfactory platform for many firms.

Crucial move

Convincing business that upgrading to XP is worth the necessary expense could be a real challenge for the Redmond, Washington-based software giant - but it is also crucial, says A G Edwards' Purcelli.

"Microsoft needs to get all [its] customers off old versions and on to this one," he told BBC News Online.

Businesses who are running Windows NT 4.0 or Windows 2000 are already using an excellent operating system, says Rafe Needleman, columnist for technology magazine Red Herring.

He also says some corporations who are satisfied with using 2000, might migrate to XP over time. "But it's not an immediate upgrade that they have to do."

Big-budget extravaganza

Microsoft has budgeted about $200m for the launch of Windows XP, including a high-profile debut in New York's Times Square neighbourhood, where XP billboards have popped outside the Marquis Theatre at 46th Street.

The world's largest software firm arguably has the largest product launch schedule in the history of the company over the next few weeks.

In addition to XP, Microsoft is also launching Xbox, its entree into the profitable games console market, and .Net, an integrated software package that links handheld computers as well as PCs.

Microsoft's hold on the personal-computer software market may not be at stake with its launch of Windows XP, but that does not mean there are not concerns.

While it is not necessary for Microsoft to score heavily immediately with XP, longer term the product takes on more significance.

For consumers who currently use Windows '95, '98 or Me, the most notable reason to upgrade maybe XP's much more stable platform.

"Frankly, not having a computer crash three times a day is a revolution," says Red Herring's Needleman.

"For consumers to have a computer that's reliable is huge."

The BBC's Lesley Goffe
"There is not the sort of excitement of previous launches"
Andrew Bush, technologies manager, Sun Microsystems
"The upgrade costs are going to cost UK business significant amounts of money"
The BBC's Louise Greenwood
"Many companies claim that Microsoft already has an unfair advantage"
See also:

05 Oct 01 | Business
Korean firms seek ban on Windows XP
24 Aug 01 | Business
Microsoft ships Windows XP
13 Aug 01 | Sci/Tech
First look: Windows XP
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