Update: Ballmer unveils new Windows

Microsoft CEO Steve Ballmer officially launched the company's long-awaited and thrice delayed Windows Server 2003 operating system Thursday, claiming it is the right product for businesses that want to "do more with less" in these tough economic times.

Customers are in "a real tight jam" because of the sagging economy, Ballmer said. "But customers still want to do more. The challenge is not just cost reduction. The challenge is for people to be able to do more with less."

Bring in Windows Server 2003, a major new release of Microsoft's operating system software for server computers, launched at many events around the world Thursday that attracted more than 200,000 people, according to Microsoft.

"This is one of the most significant pieces of work we have ever done and certainly the most significant piece of work we have done in terms of IT professionals and the data center," Ballmer said, speaking in San Francisco's Bill Graham Civic Auditorium.

In his trademark energetic presentation style, Ballmer summed up enhancements to reliability, manageability, scalability, information sharing and collaboration in the new server software. Addressing a key area and a long time Microsoft weakness, Ballmer said "security is tattooed on our brains," referring to Microsoft's software programmers.

Windows Server 2003 has undergone code reviews, includes a new software update service and comes with a newly built IIS (Internet Information Server) Web server, among other security enhancements. IIS is one of the most vulnerable parts of previous Windows server versions.

"I can't say there will be no [security] issues; there will be fewer issues and we have built better technologies to help you respond to the issues that do in fact come about," Ballmer said.

The Microsoft executive also made a pitch to Windows NT 4 users to upgrade. Windows Server 2003 reduces downtime by a factor of eight over Windows NT 4 and offers double the performance, among other advantages, he said. More than a third of Microsoft's server installed base still consists of systems running NT 4.0, despite the vendor's efforts to get users to upgrade, research firm IDC said recently.

Cigna plans to use Windows Server 2003 as part of its IT cost reduction efforts, said Jeff O'Dell, chief technical architect and vice president of technology planning and architecture at the Philadelphia-based employee benefits provider.

"Just by adding Windows Server 2003, we think we can reduce the number of physical servers we have by 25 percent," O'Dell said in an interview at the Microsoft launch event. Cigna has some 3,000 servers, about 800 of which are in a data center and the others spread across the company's various worldwide locations, he said.

Cigna is not about to replace all of its current server software, which includes Windows NT 4 and Windows 2000 as well as products from other vendors. "A lot of things need to happen before we can move over. Our intention is to be patient but as aggressive as we can. Server consolidation will be a key element in driving down our IT cost," O'Dell said.

"We will be careful with the adoption and do it on a case by case basis where it makes business sense," Ben Flock, vice president of application frameworks and virtualization at Cigna said.