The company said on Wednesday that it has decided to push out to the first half of 2005 the delivery of the next major edition of SQL Server, code-named Yukon, and a closely related update to Visual Studio.Net, called Whidbey. Until recently, the company had said that both products would ship by the end of this year.
"Microsoft made the decision to delay the delivery of these products to ensure that they meet the high quality requirements of our customers," the company said in a statement.
The company said it will offer the second beta, or test, version of Yukon and first beta version of Whidbey in the "coming months." Beta programs for both products had been slated for the first half of this year. A third beta program for Yukon, expected for the end of 2004, has been added and will be broadly available to millions of potential customers.
The final product names for Yukon and Whidbey will be SQL Server 2005 and Visual Studio 2005, said Tom Rizzo, director of product management for SQL Server.
The impact on Microsoft's future revenue from the delay is not likely to be profound, said analysts. On the other hand, the software titan is likely to face complaints from customers, particularly those who purchased licences that included upgrades to new products over a set period of time, said Rob Helm, an analyst at research firm Directions on Microsoft.
Under Microsoft's licensing programs, customers can choose to get product upgrades during a two- or three-year window rather than buy a new licence when new products come out. The annuity program, in which customers pay a discounted licence fee and then a percentage of that fee over the contract's life, is intended to simplify purchases and save customers money, while giving Microsoft more predictable revenue.
The company has been encouraging customers to purchase an automatic upgrade license for its desktop Windows operating system and Office application suite, the company's most profitable businesses.
"Companies that felt that they didn't get their money's worth [with a SQL Server upgrade licence] may take a jaundiced eye when considering buying an upgrade licence from Windows or Office," Helm said.
With the delay of Yukon, companies that purchased a three-year upgrade licence for SQL Server in 2001 will not receive anything for their investment, Helm noted. Disgruntled customers might then shy away from the automatic upgrade option, and even stop buying upgrades altogether, he said.
Microsoft's Rizzo countered that the company's volume licensing program, called Software Assurance, delivers a lot of value to customers beyond planned product upgrades, including training, regular fixes and significant add-ons to the core database. He also noted that customers have a choice of which licensing and support programs they use.
Opportunity for competitors?
The shift in the release date could also open the door to competition from Microsoft's database competitors, said Stephen O'Grady, an analyst at RedMonk. "Both Oracle and IBM -- IBM in particular -- have been moving deeper into Microsoft's territory, so loss of business is something to be concerned with," he said.
Among those three companies, which are the top three database providers, Microsoft had been gaining market share, according to market data released last year from research company Gartner Dataquest. The Yukon update of SQL Server is designed to beef up the computing capabilities of the database to compete better with Oracle and IBM.
The new shipping date for Yukon also leaves a very short time during which customers can upgrade to the new version of the database, noted Helm. Microsoft plans to phase out full support of existing editions -- SQL Server 2000 and SQL Server 7 -- at the end of 2005. If Yukon ships in the first half of 2005 as now anticipated, customers would have only about six months to plan an upgrade, which is a short period for a complex product like SQL Server.
Rizzo said that the company is evaluating changes to its support plans for SQL Server. He also said he is not concerned that IBM or Oracle will take advantage of the delay and tempt away SQL Server customers.
"We're winning against Oracle and IBM today with SQL Server 2000. We've been adding incremental value since we shipped it... We think SQL Server 2000 has very long legs," he said.
After the second beta programme for Yukon, set for the middle of the year, Microsoft will evaluate whether any planned features will be dropped, he said.
This is not the first delay for Yukon. Microsoft had said that the product would ship in 2003 and then changed the projected release date to the first half of 2004. In June last year, it said that Yukon and Whidbey would not be delivered until the latter half of 2004.
The delay of SQL Server and Visual Studio.Net -- vital products to its corporate and developer customers -- is the latest in a number of product timing decisions the company has had to make in the past several weeks.
Microsoft said that it considering a plan to release a significant update to Windows XP desktop operating system called "XP Reloaded," a move that suggests a delay in the next major edition of Windows, known as Longhorn. The XP update would follow the release of Windows Service Pack 2, which is due around the middle of the year. Last week, the company confirmed that an update to Windows Server 2003 is being prepared as well.
The company intends to release updates to many of its products along with Longhorn. Analysts speculate that Longhorn will ship in two or three years.
The delay of Yukon and Whidbey will not affect the release of other products, including Longhorn, Rizzo said.
