Microsoft's Delay of SQL Server Stresses Software Assurance

The delay of SQL Server 2005 -- the official name for what has long been called Yukon --may complicate Microsoft's efforts to keep enterprises within its Software Assurance maintenance and upgrade program, analysts said Thursday.

On Wednesday, Microsoft said it was delaying SQL Server 2005 until the first half of next year, citing reasons that included a need "to ensure that the products meet the high-quality requirements of our customers." Previously, Microsoft had said it would release the next version of SQL Server in 2004.

The delay will cause "a massive domino effect" that includes delaying other announced major upgrades from Microsoft, such as Longhorn, as well as problems for companies that have subscribed to Software Assurance, said Joe Wilcox, an analyst with Jupiter Research's Microsoft Monitor.

The push-back of SQL Server 2005 will come as disappointing news to some Software Assurance (SA) subscribers, said Wilcox, if their upgrade and maintenance contacts for the software expire before the new version is finally released.

"Companies that were unsure whether they would sign up for another round of SA would be the most impacted," he said. Those firms now face a decision that may be tough to make, what with the schedule slip: renew SA when it expires, or pay full price for SQL Server 2005 when it does release.Analysts at Gartner were beating the same drum.

In a briefing posted on the Gartner Web site Wednesday, analysts Betsy Burton, Ted Friedman, and Bill Hostmann chimed in with a warning to SA subscribers.

"Customers paying for SA maintenance agreements during this protracted development, with the expectation of receiving functional value for their investment, will find that many of these SA agreements have lapsed before the product is released," the three said in the alert.

Microsoft has been facing increased resistance to its Software Assurance from companies tired of paying for the agreements, only to see products slip beyond the contracts' expiration dates. In late January, when Microsoft released its most recent financial figures, for instance, it noted a $1.1 billion "hole" going into its fiscal year 2005 due to declining deferred revenue. Software Assurance is one of the major contributors to Microsoft's deferred revenue stream.

Another problem caused by the slide of SQL Server 2005, said Wilcox, is that it significantly narrows the window between the end of support for the current version of SQL Server -- dubbed SQL Server 2000 -- and the upcoming upgrade.For the moment, SQL Server 2000's mainstream support -- which provides a variety of technical support options and free security and bug fixes -- is scheduled to expire Dec. 31, 2005.

"Companies facing support expiration of SQL Server 2000 next year would have less time to test and prepare for SQL Server 2005," he said. Depending on what Microsoft means by "the first half of 2005" -- its only hint of when it hopes to ship the new SQL Server -- the window may be as short as six months.

That's not long enough for the Gartner analysts, who recommended that companies "consider that SQL Server 2005 will not be proven for production enterprise applications until early 2006, following at least two product fix packs."

But it doesn't end there. There's more fallout from the SQL Server delay beyond problems for SA subscribers.

Because of the interdependency between many of Microsoft's ongoing products -- including SQL Server, the also-delayed Visual Studio .Net 2005, and the next-generation operating system code named Longhorn -- the slide of one, such as SQL Server, means that all slide in their schedules."Microsoft is going a tremendous job of integration as it approaches the Longhorn wave of products," said Wilcox. "Because they're intertwined, a delay in one, such as Yukon, impacts others," ranging from Longhorn to the next version of Office (which was to coincide with the release of Longhorn).

The domino effect then ripples through Microsoft's product line. "If Longhorn ships later because Yukon ships later, then others slip," he said.

Wilcox now believes that Longhorn's release date could slip as far as into 2007; previously, he had been betting that it would be during 2006, a year after Microsoft's announced roll-out date.

Delays like that -- years between new versions of major, money-making products such as its Windows operating system -- will make it tougher for Microsoft to keep Linux at bay. "If it does nothing, or releases nothing for two or three more years," said Wilcox, more companies may turn to Linux as an alternative.

The solution, he said, is for Microsoft to do a better job of evangelizing Windows XP, its current desktop operating system. There are signs that Microsoft is doing just that, Wilcox said, citing the upcoming Windows XP Service Pack 2 (SP2) and the rumored Windows XP Reloaded, a possible major revision to the OS during 2004."Microsoft has finally come to the realization that its XP evangelism has failed. It's not effectively sold the benefits of XP to the marketplace," Wilcox said.

The smart move, he said, would be for Microsoft to put much more effort behind Windows XP -- revising it, aggressively promoting it -- during the likely long gap between it and Longhorn.

"Rather than sell the future, Microsoft should sell what it has now," Wilcox said.