Upgrading to Windows XP Service Pack 2 will cause problems with about one in every 10 PCs running the operating system, according to research published Tuesday by a Canadian asset-monitoring service provider.

AssetMetrix probed more than 44,000 Windows XP systems housed in nearly 350 companies to come up with its numbers, matching what it found on the PCs against various lists that Microsoft has posted of programs that have, or may have, compatibility issues with the massive update.

"On average, 10.3% of the Windows XP-based machines will have an issue of some degree with SP2," said Steve O'Halloran, managing director of AssetMetrix Research Labs. "Or better put, they have the 'opportunity' for an issue to arise."

The Ottawa company used Microsoft-made lists--including one that identifies applications that have an issue with the now-on-by-default Windows Firewall, and another that names apps known to experience a "loss of functionality" when Service Pack 2 is installed--to come up with its figures.

The 10% rate didn't come as a shock, said O'Halloran, but a new-found correlation between company size and XP usage did. "Actually, I was assuming [the percentage] would be higher, but I didn't expect to spot a statistical difference between large and small companies."

Business with fewer than 100 XP machines, for instance, can anticipate problems with 11.9% of their systems, said O'Halloran, while those with more than 100 XP PCs can figure on issues with just 6.2% of their desktops.

Smaller companies will have a tougher time with Service Pack 2 for a variety of reasons, including a higher concentration of Windows XP PCs. According to AssetMetrix's data, the smaller the company--as measured by the number of PCs it operates--the more likely it's a 100% XP shop.

Other factors play to the increased chance that smaller businesses will be affected by Service Pack 2, said O'Halloran, including their use of older software--which in some cases has issues with Service Pack 2 while newer versions do not--and use of second- or third-tier programs, like Corel's WordPerfect, one of the titles on the "loss of functionality" list.

A lack of standardization also plays to a bigger-than-average impact of Service Pack 2 on small business. Several FTP programs are on the Windows Firewall list, for example, and where an enterprise would likely force all users to deploy just one of those, small businesses are much looser and tend to have different programs on different machines. "It's like the lottery," said O'Halloran. "The more programs you use, the better chance you'll be a 'winner.'"

While small companies will probably have it tougher than big ones today, that will change as larger companies update systems to XP (and thus Service Pack 2) in 2005 in anticipation of Longhorn and to refresh aging hardware.

"Larger companies will have to resolve this tomorrow," said O'Halloran, "because they'll find it's a continual process to insure that this affected software is remedied" when XP SP2 is added to the mix."

By his estimate, compatibility issues with Service Pack 2 will last a year to 18 months, based on previous Windows migrations. And in his mind, as well as many analysts, Service Pack 2 is as much a new operating system as a major security update. "Users should understand software compatibility from that perspective, that [Service Pack 2] is really a new operating system."

But don't let the one-in-10 PC with compatibility problems spook you, said O'Halloran. "Even through you're seeing this quantified, don't use that as an excuse to skirt the issue," he said. "Deploy SP2 now. It's for the greater good of the organization, even if some systems and applications won't work without work."

AssetMetrix offers a seven-day, 25-system trial of its managed asset service--including the new reports that identify which Windows XP-based PCs harbor incompatible applications--on its Web site.