The company is moving beyond its antitrust legal action and browser wars with Netscape, but still faces many challenges, including increasing threats to its desktop monopoly, datacentre-class scale, security and its own branding choice of .net, said Smith.
He added that even though the industry still awaits a final ruling on the antitrust settlement, Microsoft is growing and Gartner believes it will continue that growth. "It's still a very aggressive company, a very paranoid company when it comes to its competitors," Smith said.
Smith added that Microsoft was again focusing money and manpower on the idea of unified storage model, which it pursued previously under the codename Cairo, an operating system once slated as the next generation of the first release of Windows NT.
The unified storage model is now scheduled to appear in Blackcomb, a future version of the Windows operating sysytem.
"It's very much along the lines of the vision that Bill Gates has been talking about," Smith said. Another aspect of that vision is pushing Windows higher into the datacentre.
Smith said that when managed well, Windows 2000 could be as reliable as Unix. However, he said Microsoft's servers might be better suited for global-class computing than enterprise-class computing. This is because of the company's heavy involvement with Web services, which enable the more flexible desktop configurations that are required when connecting with users across the Internet.
In the meantime, Microsoft is facing threats to its desktop dominance, from Linux, its own licensing, browser-based applications, and alternative computing devices.
"Unless Microsoft makes some concessions on its licensing, StarOffice may become a viable alternative," Smith said. "It can capitalise on the anti-Microsoft sentiment out there."
Gartner also said that for the next three years Microsoft would have difficulty with its .net branding. People do not understand Web services, .net, or the associated .net products, said Smith.
He noted that Microsoft continues to face security issues despite its Trustworthy Computing initiative, and users will have to use third-party products to achieve adequate security through 2004.