Microsoft, Andersen form Windows 2000 services venture

Microsoft and Andersen Consulting have set up a $1bn dollar joint venture to provide internet, ecommerce, and other related services to Windows 2000 users.

The software giant rolled out its Windows 2000 operating system (OS) last month and some analysts expect it to generate more than $5bn in revenue for the company over the next four years.

But a recent survey by IDC found that only about five per cent of small businesses planned to move to the OS over the next 12 months. Larger companies with 50 to 999 employees are expected to move faster, with 17 per cent intending to migrate.

The joint venture, which will be called Avanade, will have a staff of 3,000 technical experts and be based in the Seattle area. Branch offices are planned for Paris, London, Sydney, Sao Paulo, Singapore, San Francisco, Dallas and New York over the next 18 months.

The organisation will target its skills at large enterprise projects in an attempt to take on IBM Global Services. Steve Ballmer, Microsoft's president and chief executive, said Andersen was the best partner for Microsoft because of its size.

"Nobody, not even IBM Global Services, can do consulting like Andersen. Nobody has the scale," he said.

Microsoft will contribute $385m in cash towards the running of the company and provide support for technical development. Andersen will provide staff, training, resources and software development skills, but the two will own roughly half of the firm each. Avanade is expected to go public as soon as possible.

Mitchell Hill, an Andersen partner, will become the organisation's chief executive, but the deal will lead to the two companies creating a new organisation within Andersen Consulting to design and build business applications.

The move comes only a few days after Cisco Systems allied itself with French management consultancy, Cap Gemini, to help telecommunications carriers, service providers and cable companies implement corporate networks.