Gates hosts Windows 98 rally

In a well-choreographed show of support for Microsoft, CEO Bill Gates and other company executives joined about 60 partners in warning that any delay in the release of Windows 98 would have serious consequences for the personal computer industry and the U.S. economy.

The roster of participants predictably included executives from key partners such at Compaq Computer, Visio, and CompUSA. But it also had leaders from a number of groups that represent people with disabilities and a Harvard University economics professor.

Gates told the audience that if antitrust regulators are successful, they essentially would be punishing Microsoft for making improvements to the Windows operating system. "The government's argument all boils down to a claim that we're putting too much Internet support into our products," he said, making the oft-repeated analogy that the claim is akin to "forcing car makers to sell cars without car stereos."

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The theme of the 75-minute conference was clear: If antitrust regulators delay the release of Windows 98--as the Justice Department and a number of states are considering--high technology companies, consumers, and the U.S. economy will suffer.

"An injunction delaying Windows 98 would clearly have a negative impact on the country as a whole," said Eckhard Pfeiffer, president and CEO of Compaq and one of eight speakers at the rally, which was organized by Microsoft. "As an industry, we have already spent tens of millions of dollars developing and promoting products that take advantage of Windows 98. I don't think we can deprive consumers of that tremendous value that we are ready to launch and ready to ship."

Dr. N. Gregory Mankiw, a professor of economics at Harvard, echoed that forecast, saying postponing the release of Windows 98 "would throw sand into the gears of human progress." He added that it was "deeply troubling" how quickly politicians are buying into the theory that the government should play a role in structuring the computer industry.

"The government should do what physicians do...which is do no harm," he opined. "The computer industry is not broken, and the government should not try to fix it."

Just hours before the rally, conservative Sen. Orrin Hatch (R-Utah)--whose constituents include bitter Microsoft rivals Novell and Caldera--made a preemptive strike against the event by questioning whether the participants were appearing by choice.

"It strikes me as curious that it was only after calls from Microsoft that many of these individuals saw fit to sign letters and make public appearances," Hatch was quoted as saying in a floor statement. "Indeed, I have been told that some executives in fact hope to see the Justice Department pursue further its case against Microsoft, but have chosen to join Mr. Gates on that stage today because they feel they have little choice but do so in order not to jeopardize their relationship with the industry's most powerful and important player."

Microsoft competitors and others opposed to the software giant also released statements denouncing the company's public relations event. One issued by the Computer & Communications Industry Association quoted its president, Ed Black, as saying: "We do not believe that there will be any substantial adverse economic impact from exploring the practices of a monopoly power that dominates a significant sector of our national economy."

As previously reported, the Justice Department and up to 13 states are investigating Microsoft and are close to deciding whether to file a suit targeting allegedly anticompetitive business practices. Speaking on condition they not be named, two people close to the case say a lawsuit most likely would seek an injunction against Windows 98 as it exists now in beta. Microsoft says it expects to ship the new operating system within the next two weeks and make it available to consumers by June 25.

Others speaking at the rally, held at Equitable Building in New York City, included Gates, Bob Herbold, Microsoft's chief operating officer; Yusuf Mehdi, the company's group product manager; Jim Halpin, president and CEO of CompUSA; Bill Krause, president and CEO of Storm Technologies; and Ted Johnson, executive vice president and chief technology officer of Visio.

Other companies represented in the audience included 3Com, Dell Computer, Diamond Multimedia Systems, Eastman Kodak, and Micron.

In addition to those in the audience, Microsoft found a new ally yesterday in the form of John Sculley, former chairman of Apple Computer. In an interview with the Seattle Post-Intelligencer yesterday, Sculley said that regulators investigating Microsoft were guilty of "political harassment," adding that "what the government is trying to do is completely unjustified."

As reported yesterday, Microsoft's warnings that a delay in Windows 98 will create a ripple effect that will harm the economy at large is drawing mixed reactions. A number of analysts, for example, have said that relatively few hardware and software manufacturers are developing products that depend on the new operating system.

In an interview yesterday, Connecticut Attorney General Richard Blumenthal, who has been investigating Microsoft from some time, said the company's lobbying efforts were unlikely to have any "substantial effect" on his decision to file a suit.