Mixed Reviews On Wall Street For Innovative XP

Windows XP is the most innovative addition to the Windows family in years, finally burying the old MS-DOS code base and moving everyone-both consumers and businesses-to the same NT architecture.

In addition to being more stable and more reliable, it also allows Microsoft to concentrate all its OS development efforts on one product, instead of splitting its attention. However, while it offers a multitude of benefits for consumers, Windows XP isn’t that much of a breakthrough for business customers. And installing it costs money, takes time; it could have bugs that only become apparent with time and it could cause existing applications and peripherals to stop working. Finally, Windows XP is not that different from Windows 2000. In fact, if Windows 2000 is another way of saying NT 5.0, then Windows XP is NT 5.1.

Damon Kovelsky, an analyst with Meridien Research, doesn’t see enough differences to make an upgrade worthwhile, “but there are enough differences to give IT people headaches,” he said, adding, “money can better be spent in other places, especially in the next six months.”

That thinking led American Century Investments to postpone the upgrade.

“It does not look likely that we would upgrade in the next six months,” said Richard Wilkie, vice president of IT investment management services at the Kansas City, Mo. institutional investor. “It was a budget consideration.”

Other Wall Street firms are concerned about the privacy issues. For example, there’s been a lot of controversy recently around Passport, which collects private user data such as passwords and financial account numbers.

“Our fear initially was the privacy issue and we held back,” said Christopher Corrado, CTO of Merrill Lynch’s corporate and institutional client group, adding that he sees no clearly apparent business reason to upgrade, given the expense and the current economic climate.

“We’ll revisit the decision the end of first quarter,” he said, referring to spring of 2002.

For Hartford Financial Products CIO Craig Lowenthal, the major concern was the activation process, which checks the user’s hardware configuration-and disables Windows XP if the hardware changes significantly. He also added that he was concerned about the privacy issue.

“I’m going to hold off on XP,” he said.

The company uses Windows 2000 on laptops and NT on desktops and will stick with that for the near future, he said.

But both the privacy and the activation issue have been overblown, counters Jeremy Lehman, Microsoft’s chief technologist for financial markets.

For volume purchases of the operating system, activation is not required at all. And when it is, there is no need to give any personal identifying information, he said, with Passport being an optional convenience for users.

Lehman added that Windows XP checked the hardware configuration to protect against piracy-and that no actual information about hardware was transmitted to Microsoft itself. If there are a lot of changes to the hardware, it may require reactivation, he said-but that should be an easy and straightforward process.

Lehman also said the cost of the upgrade-$100 for Windows XP home edition and $200 for Windows XP Professional-will not be a deterrent because of the improved productivity features.

But money is a critical issue on Wall Street, analysts argue, with the events of Sept. 11 coming on top of the general market downturn.

That has resulted in a shift in priorities away from operating systems and toward security and increased communication, said Rob Enderle, an analyst at Cambridge, Mass.-based Giga Information Group. Ironically, Windows XP has something to offer on both of these fronts-but it isn’t positioned that way yet, Enderle said.

Most of Microsoft’s marketing push is going to be targeted at consumers, said Michael Silver, analyst at Stamford, Conn.-based Gartner Group.

In that category, Windows XP is a significant advance-and not just because of the video editing. Windows 95 and Windows 98 are basically the old MS-DOS with a graphical user interface stitched on top of it. The NT line of operating systems does away with the DOS legacy and the result is a more stable operating system.

Consumers who upgrade from Windows 95 or Windows 98 to Windows XP will instantly have a much more reliable product, less prone to crashing, faster to boot up, and easier to use. According to a just-released Gartner report, Windows XP will be much more popular with home users, with over 4 million units sold in 2001-and over 41 million in 2002.

By comparison, businesses worldwide will likely buy about 1 million units, with another 16 million in 2002. Windows XP won’t overtake Windows 2000 until 2003, the report said.

“Our advice would be that if you’re already on Windows 2000 or getting there, that you should continue, at least for a while,” Silver said. “However, just like Microsoft is starting to reduce support options for Windows 9x and NT 4, Windows 2000 isn’t always going to be supported either.”

He suggests that companies adopt a mixed solution, with new machines running on Windows XP, and gradually phase out older operating systems. That’s what financial firms are planning to do, said Lehman.

“It’s hard to take a 100,000 person firm to a new operating system overnight,” he said. “But there are large investment banks that plan on making it the new standard in different areas. For example, one plans to make it the laptop standard.”

Windows XP is particularly attractive for laptop users because it finally makes “resume” a working feature. The “stand by” mode maintains power just to active memory, meaning that a start up is only takes a few seconds. A start-up from hibernate takes a little bit longer because it saves active memory to the hard disk, but is still much faster than a full reboot and saves power.

Windows XP also comes with automatic optimization of memory and disk space, which makes the laptop start up significantly faster. For example, Windows XP tracks application and memory usage and automatically reconfigures the system to make the most popular applications the fastest to use.

It can save the complete status of the desktop-which applications are open, how they are being used-to the drive, so that when it starts up again, users see the same screen they saw before they shut down. Finally, Windows XP is able to turn off all power except to active memory, so that start-up is instant.

“Windows 2000 has some elements of this, but not the optimization of memory and hard drive,” Lehman said. But while laptop users will see the biggest improvements, organizations as a whole will also benefit from Windows XP, said Lehman. Productivity and performance is improved by the memory optimization features, he said.

Microsoft improved reliability by identifying the elements that caused the most crashes on earlier operating systems-third-party drivers-and requiring XP certification from all suppliers. Windows XP comes with networking built in, including drivers for wireless networks, among others. For example, road warriors with infrared-enabled cellular phones will be able to communicate with the phone using the built-in infrared modem in Windows XP.

That is, XP new security push. Windows XP was built around security considerations, Lehman said. Instead of building first and testing later, Microsoft engineers now start with possible ways to attack the system and write the software in such a way as to foil those attacks.

“It puts security right there at the focal point of the developer’s mind,” Lehman said.