Windows Server 2003 Off to a Fast Start as Microsoft Remakes Corporate Structure

In its first 90 days of availability, Windows Server 2003 has outsold Windows 2000 three to one, when compared to that product's first 90 days. Microsoft will tout this fact today at an analyst meeting where it will also announce a change in the way the company's executives account for costs in various departments at the software giant. It's unclear whether the dramatically increased sales pace, however, was brought on by Microsoft's Licensing 6.0 program, which essentially provides free product upgrades to companies that purchase a multi-year agreement.

"This product is really going out the door," said Bob O'Brien, group product manager for the Windows Server division at Microsoft. "Triple the sales of Windows 2000 is … great, ... especially in this economy." Not coincidentally, server sales at the software giant were up significantly in the quarter, generating revenues of $1.93 billion; in the same quarter last year, the server division made $1.64 billion.

Microsoft's server division is the only business unit at Microsoft, besides those responsible for Windows and Office, that made money in the previous quarter. At today's analyst meeting, Microsoft will announce a change to a unit accountability system, similar to that employed under Jack Welch at Generic Electric, which will address this problem. The idea is that Microsoft's money-losing operations will no longer be quietly bolstered by the sales of its successful products, and each business unit will have to cost-justify their products' existence. Expect to see some interesting product demos at the meeting, including a preview of MSN 9, the company's upcoming Internet client.

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