Next SQL Server database and Visual Studio.Net delayed

Microsoft is delaying the release of its forthcoming SQL Server database and Visual Studio.Net development tool in a move that could deprive customers of upgrades they were expecting.

The company said on Wednesday that it has decided to push out to the first half of 2005 the delivery of the next major edition of SQL Server, code-named Yukon, and a closely related update to Visual Studio.Net, called Whidbey. Until recently, the company had said both products would ship by the end of this year.

"Microsoft made the decision to delay the delivery of these products to ensure that they meet the high quality requirements of our customers," the company said in a statement.

The company said it will offer the second beta, or test, version of Yukon and first beta version of Whidbey in the "coming months". Beta programs for both products had been slated for the first half of this year. A third beta program for Yukon, expected for the end of 2004, has been added and will be broadly available to millions of potential customers.

The final product names for Yukon and Whidbey will be SQL Server 2005 and Visual Studio 2005, said Tom Rizzo, director of product management for SQL Server.

The impact on Microsoft's future revenue from the delay is not likely to be profound, said analysts. On the other hand, the software titan will likely face complaints from customers, particularly those who purchased licences that included upgrades to new products over a set period of time, said Rob Helm, an analyst at research firm Directions on Microsoft.

Under Microsoft's licensing programs, customers can choose to get product upgrades during a two- or three-year window rather than buy a new licence when new products come out. The annuity programme, in which customers pay a discounted licence fee and then a percentage of that fee over the contract's life, is intended to simplify purchases and save customers money, while giving Microsoft more predictable revenue.

The company has been encouraging customers to purchase an automatic upgrade licence for its desktop Windows operating system and Office application suite, the company's most profitable businesses.

"Companies that felt that they didn't get their money's worth [with a SQL Server upgrade license] may take a jaundiced eye when considering buying an upgrade licence from Windows or Office," Helm said.

With the delay of Yukon, companies that purchased a three-year upgrade licence for SQL Server in 2001 will not receive anything for their investment, Helm noted. Disgruntled customers might then shy away from the automatic upgrade option and even stop buying upgrades altogether, he said.

Microsoft's Rizzo countered that the company's volume licensing programme, called Software Assurance, delivers a lot of value to customers beyond planned product upgrades, including training, regular fixes and significant add-ons to the core database. He also noted that customers have a choice of which licensing and support programs they use.

The shift in the release date could also open the door to competition from Microsoft's database competitors, said Stephen O'Grady, an analyst at RedMonk. "Both Oracle and IBM - IBM in particular - have been moving deeper into Microsoft's territory, so loss of business is something to be concerned with," he said.

Among those three companies, which are the top three database providers, Microsoft had been gaining market share, according to market data released last year from research company Gartner Dataquest. The Yukon update of SQL Server is designed to beef up the computing capabilities of the database to compete better with Oracle and IBM.

Martin LaMonica writes for CNET News.com.