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Face of PCs to change with Win 98

Some PC makers are finding signs of encouragement as the upgraded product launches.

While Windows 98 may not spur millions of consumers to rush out and buy new computers, some PC makers are finding signs of encouragement as the upgraded product launches.

The new Microsoft operating system (OS), which integrates greater Web functionality and a browser, is turning out to be a hidden bonus for PC makers looking to gain more control--or squeeze more money--out of the desktop. Vendors such as Gateway and IBM are leveraging Windows 98 to promote their own Internet connectivity services.

Packard Bell, meanwhile, is filling in the border between the monitor edges and the OS interface with its own content, while corporate brother NEC Computer Systems will offer Netscape Navigator on a CD-ROM with its laptops as a way to differentiate itself from competitors.

Whether these improvizations are the result of the structure of Windows 98 or Microsoft's ongoing problems with the Department of Justice is a subject of debate. What is certain is that the desktop will change.

Microsoft labels Windows 98 a See special report:
Windows dressing consumer upgrade, and a relatively modest one at that. The OS features support for newbie-friendly features like Universal Serial Bus, which enables easier peripheral connections, TV tuner cards, and integrated Internet access. Internet Explorer is worked right into the OS, allegedly for customer convenience.

The consumer spin, and the limited changes the new OS brings to the table, has tempered the potential for sales. International Data Corporation has predicted that only a quarter of medium to large businesses will even upgrade to Windows 98, opting to wait for the next version of Windows NT, Microsoft's corporate operating system. Consumers will therefore make up the majority of Windows 98 customers. (Windows 98 will in fact be superseded in two to three years with a consumer version of Windows NT.)

"We're looking at the launch for a mild stimulant for the PC market for the remainder of the year, but not necessarily a spike," said Kevin Hause, IDC analyst.

What PC makers can get excited about, analysts say, is the desktop flexibility Microsoft has been forced to hand back to vendors. Part of this comes from the increased integration of Web functions into PC technology, but it's also attributable, say some, to increased public and government scrutiny into the company's business practices.

Microsoft has repeatedly emphasized in its public and legal statements that PC makers have always been able to offer customers both Internet Explorer (IE) and Netscape Navigator. PC makers have come to take Microsoft at its word.

In May, Gateway confirmed that it would direct its customers to its gateway.net Internet service, where customers of the direct seller's ISP will be given a choice between IE and Navigator. Gateway declined to comment on whether the pressure of the antitrust suits forced Microsoft's hand, but several Gateway executives were quoted in Justice Department depositions criticizing Microsoft's allegedly restrictive OEM [original equipment manufacturer] agreements.

  • Also in May, NEC executives confirmed that the company would hide the IE icon in its new laptop computer. Instead, NEC said it would ship both Navigator and IE on a CD-ROM with the systems. Two weeks later, NEC subsidiary Packard Bell said it would begin using technology from Pixel to add its own software and Internet choices to the "overscan" or border area on the desktop screen.

  • In June, executives in IBM's Aptiva consumer systems group said that Big Blue would also direct its customers to the company's Internet service, but went one step further than Gateway by stating that Navigator would be the default browser on the dial-up service. IBM later reversed that decision, however, stating that IE would replace Navigator as the dial-up default browser in its back-to-school systems.

  • Compaq introduced its Internet-ready consumers PCs. The new Presario computers will come with an Easy Access Internet Keyboard, featuring one-touch Internet access. With the new keyboard, Compaq effectively bypassed the desktop squabbles by taking users directly to Web sites.