Given the missing pieces--more-scalable editions of the operating system and database, increasingly customizable E-commerce tools, and improved middleware for connecting Windows 2000 servers to legacy systems--customers are balancing the desire to install what's here now with Microsoft's promise that even better technology lies a few releases down the road.

SmarterKids.com Inc., a $5.4 million online retailer of educational products in Needham, Mass., is writing its own software to patch missing pieces in Microsoft's portfolio. "We're moving very heavily into customizing our site to match kids' learning goals," says Richard Viard, co-founder and senior VP of research and development. Dramatic improvements in Windows 2000's ability to serve up dynamically created pages means the company can roll out new features more easily. "The more personalization you do, the more database-intensive the site has to be," he says.

SmarterKids.com began running its site on Windows 2000 two weeks ago and manages its online catalog with Site Server Commerce Edition. But some of the E-commerce product's features are unsophisticated, Viard says. Buy-two-get-one-free campaigns that SmarterKids.com built with the marketing-campaign manager in Microsoft's product didn't always make the least-expensive item the free one, for example. "We get hit on margin in ways that we shouldn't," he says. Since Site Server can't accommodate all the promotions SmarterKids.com's marketing department devises, "We have to write all the code ourselves, which isn't efficient," Viard says. "If Commerce Server 2000 were out today, we'd rely on that. Unfortunately, we've already built ourselves a lot of the features that are coming."

Available now are Windows 2000 Professional, the replacement for Windows NT, 95, and 98 on business desktops; Windows 2000 Server, for small-business and departmental servers; and Windows 2000 Advanced Server, for running Web-commerce sites. Windows 2000 Datacenter Server, for running large data warehouses and serving hosted applications, is due this summer; the initial 32-bit version is expected to be followed by a 64-bit version later this year. Microsoft is preparing updates to its SQL Server database, Visual Studio tools environment, SNA Server, and Site Server Commerce Edition. Also in the works are two new products: BizTalk Server, for document exchange between companies using the Extensible Markup Language, and Application Center 2000, for component load balancing.

Microsoft customers say many of these products could eventually find a home in their data centers, but the uncertain arrival dates and lack of testing make planning difficult. "Windows 2000 is an emerging platform for small business and small applications within a large company," says Tony Scott, chief technology officer for information systems and services at General Motors Corp. But, he adds, "We don't have enough experience with it to have clear answers about where it's best-suited."

GM runs the Web server that powers its TradeXchange procurement site on Windows NT and plans to begin migrating to Windows 2000 Advanced Server. The automaker is also developing internal apps on Windows 2000 that will let employees schedule conference rooms, file expense reports, and submit requisitions online. In many cases, Microsoft's platform offers development speed, cost-of-ownership, and support advantages over Unix platforms, Scott says.

Yet GM's engineering systems and SAP installation will remain on Unix, and the company is getting ready to switch the database that stores product information for TradeXchange from SQL Server to Oracle on Sun Solaris, according to a GM spokesman. The decision was driven by a recent deal involving DaimlerChrysler, Ford, and GM to pool their online purchasing activities; Ford's AutoXchange marketplace runs on Oracle software.

Scott says he's looking forward to 64-bit versions of Windows 2000 to "get into places where we're not comfortable with Windows 2000," such as data warehousing. "It's just a question of scale at this point."

If Windows 2000 proves stable and scalable enough to run supply-chain and E-commerce Web sites, companies can reap cost and time-to-market savings by leveraging the breadth of developer talent trained on the Microsoft platform. And Microsoft executives call Windows 2000 a "bet-the-ranch" product for the company: In addition to the $2 billion in engineering costs and 3-1/2 years of development time the vendor has invested, Microsoft has set customer expectations so high that the operating system could be a make-or-break product for the company.

If Windows 2000 succeeds, Microsoft will have proved it can compete in an era in which the focal point of computing has shifted from writing software that supports activities inside a company to developing applications that run on centralized servers for distribution to large numbers of users via the Internet. If Microsoft's model--reliable, scalable software, plus out-of-the-box features to ease application deployment, delivered on low-cost hardware--can't erode the market dominance of Sun Microsystems and other Unix vendors... well, the folks in Redmond prefer not to discuss that outcome.

"Sun is still carrying expensive, overpriced iron on its back, and Windows 2000 makes that more clear," says Steve Ballmer, Microsoft's president and CEO. That's the bluster. The bane is that Microsoft is trying to shrug off the perception that its flagship operating system is designed for client-server environments and neatly bounded groups of users.

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Photo of Scott by Dwight Cendrowski
Photo of Viard by Brian Smith