Ronna Abramson
"It's still the server story," said Transamerica Investment Management fund manager Chris Bonavico, who holds Microsoft shares. "That's continuing in the midteens growth range."
Updates to Microsoft's Windows Server 2003 product are expected to help push growth. "The 64-bit version of Windows Server 2003 is really going to be a big driver over the next one to two years," Hilal said, citing the thirst among customers for 64-bit processing, in which applications process 64 chunks of data at a time vs. the current 32-bit processing standard. The product is in beta testing and scheduled to launch by the end of the year. Yukon, the next version of SQL Server, will offer business intelligence tools and better security, Hilal said. (Microsoft doesn't break down sales for the SQL Server, although analysts have pegged them at 5% of total company sales and as also growing into the teens). However, Matt Rosoff, an analyst with independent research firm Directions at Microsoft, disagrees that the next version of SQL will be an immediate revenue generator. "It doesn't usually work like a consumer release where a product comes out and suddenly everyone buys it," Rosoff said. Installing a new version of SQL Server isn't easy, and customers considering the move may already have paid for a subscription that entitles them to the new version, he added. But longer term, Rosoff believes that the SQL Server combined with the launch of Visual Studio.Net next year will be important to Microsoft's promotion of its platform over others such as Java, as the company aims to take share from Unix and not lose share to Linux's open-source software. Instead, Rosoff believes that already released versions of Office and Windows will remain Microsoft's main sources of growth for the next couple of years. "It's not a whole lot of new stuff; it's just getting people onto the current generation and effectively selling the current products," Rosoff said. "Getting consumers and businesses to upgrade to Windows XP [and] getting people on Office 2003 are really important."
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