Major Microsoft software partner Insight sees sluggish Server 2003 refresh

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Major Microsoft software partner Insight sees sluggish Server 2003 refresh

Many businesses won't leave Windows Server 2003 until a major security breach happens, said Ken Lamneck, chief executive of Microsoft licensing powerhouse Insight.

It came as Insight posted a slight dip drop in quarterly profits, with non-GAAP net earnings down 2.3 percent on a year-over-year basis, from $11.7 million to $11.5 million, or 29 cents per share, beating analysts' estimates of 27 cents per share.

Sales for the quarter ending 31 March jumped by 6 percent, to $1.22 billion, after factoring out changes in foreign currency exchange rates. 

Insight's stock price plummeted 11.2 percent, to $26.11, in after-hours trading Wednesday. The company's financial results were released after the market closed.

"We expected to see a stronger sense of demand from the services side [of Windows Server 2003] as well as on the product side," Insight's Lamneck told CRN USA after the earnings call. "We still think there's more growth to be had here."

Vendor partner and consulting companies concurred with Lamneck's view that the uptick isn't as sharp as all parties involved were anticipating. "It's not like their environment gets shut down," he said. 

The delay in migrating away from Server 2003 – which Microsoft will stop supporting 14 July 14 – stems in part from end users underestimating the complexity of upgrading, Lamneck said. Since Server 2003 operates on a 32-bit operating system while more modern servers are on a 64-bit operating system, many of the existing applications will not be easily portable. 

"It may be a little bigger than some think," said Lamneck, noting that the end-of-life is also forcing customers to evaluate their storage environment.

The fact that server upgrades will likely extend into the second half of 2015 is not necessarily a bad thing, Lamneck said, since many solution providers lack the service talent to do so many migrations in such a short timeframe.

Lamneck doesn't expect that the stragglers will look seriously into migrating until problems start stemming from the lack of security protection.

"If a company does have a security breach because of this, they really open themselves up for a lot of scrutiny," Lamneck said. "When that does occur, I think that really will be the catalyst for many companies to say, 'We're going to make sure we're not the next one.' "

This article originally appeared at crn.com

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