Microsoft on Friday said it has wrapped up the development work on Windows Server 2003 and will ship the operating system on schedule next month. However, a just-released survey by the Yankee Group says that only 12 percent of the current Windows installed base plans to adopt the new OS in the next year.

That figure compares to about 30 percent of the installed base that adopted Windows 2000 server in the first 12 months after it shipped.

Critics have characterized Windows Server 2003, whose release has been delayed three times from its original date of October 2001, as an incremental upgrade to Windows 2000. That assessment, a sagging economy and the on-going war in Iraq are a combination that will impact corporate adoption, experts say.

"Microsoft's two biggest competitors are itself with Windows 2000, which is a solid operating system, and external factors including the fact that we are in a deep economic downturn," says Laura DiDio, an analyst with the Yankee Group. "Microsoft is faced with the fact that people don't have the money and it's tough to make a business case for this upgrade."

The Yankee Group survey shows that 34 percent of 1,000 respondents plan to adopt the server. Of those, 63 percent say they have no timetable for that adoption and only 7 percent say they plan to immediately deploy the server, which equals about 2 percent of the install base.

Another 11 percent of the committed adopters say they will roll out the server out in three to six months, while 5 percent said they would do it in six to nine months, and 14 percent in 12 months.

Overall, nearly 51 percent of the respondents said they have not yet determined if they will adopt the server and 15 percent said they would not be deploying it.

DiDio says that of the 15 percent not planning an upgrade, 42 percent said that they have no compelling business justification. Another 13 percent said they could not afford it under Microsoft's new Licensing 6.0 program, 12 percent said they had no budget, and 9 percent said they were considering a move to Linux.

Microsoft has focused the appeal of Windows Server 2003 on consolidation, security, performance, and ease of use that will free up IT for other tasks. The OS features built-in support for Microsoft's .Net Framework, 64-bit versions, and enhancements to Active Directory.

The OS is the first to be developed under Microsoft's Trustworthy Computing initiative that began in January 2002, which contributed to delays in the server's release.

Microsoft has especially been touting the server's appeal for customers running aging versions of the Windows OS saying deployment costs could be cut by as much as 50 percent over NT Server 4.0.