Many Microsoft users this year face the tough choice of either upgrading or relying on unsupported software.

Windows 98 and 98SE, and software applications Office 97 and Outlook 98, will be officially declared obsolete on 16 January.

From this point Microsoft will end all support and security patching. Support and patching for NT 4 ceases at the end of 2004.

Companies looking to upgrade will realistically have to move to Windows XP. Such a move would almost certainly involve large-scale hardware upgrades, in addition to the significant financial cost of the software.

Whereas Windows 98 required a 486 processor, the minimum spec to run Windows XP smoothly is a Pentium III.

According to analyst IDC, there are 39 million Windows 98 users worldwide.

Among the readership of vnunet.com's sister title IT Week, 35 per cent of firms still have Windows 98, 95 or ME deployed on some desktops.

Windows NT Server is still in use at 40 per cent of sites, while 38 per cent still have Windows NT workstations.

"Windows 98 was designed at a time when the internet was very different from today," said Lars Ahlgren, global services marketing manager at Microsoft.

"As time has gone on it has become increasingly difficult to provide proper patches.

"However, all support documentation and patches will still be available on the website. Users may also be able to send in for a free CD of articles on Windows 98."

Ahlgren added that precise data was not available on the number of Windows 98 and 98SE users, but conceded that it could be as high as a third of the UK installed PC base.

The choice of upgrade or no support may provide an opportunity for providers of open source alternatives to Microsoft's range, as companies look to control costs and extend hardware life.

"2004 is looking very exciting," said Jasmin Ul-Haque, commercial director at SuSE Linux UK.

"We're seeing a lot of companies actively investigating open source. It has always been one of the strengths of Linux that you can run it on legacy systems, and that helps the argument."

Mike Ferris, product manager for Red Hat Enterprise Linux, added: "The open source model can also be deployed on a much larger hardware range than that of Microsoft. You have to look at the whole value proposition."