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Messages mixed on Win 98 delays

The sky is not falling, according to industry watchers who say that postponing Windows 98's release will likely have a minimal economic impact.

The sky is not falling.

While Microsoft and dozens of its partners warn that delays in the release of Windows 98 could drag down the entire personal computing industry, a number of industry watchers say that postponing the operating system's release will likely have a minimal impact on the PC sector.

The warnings over Windows 98 are designed to stem off lawsuits that antitrust regulators from the Justice Department and up to 13 states are considering against Microsoft. While regulators say they haven't yet decided if they'll even take legal action, any suit filed could delay the scheduled upgrade to the ubiquitous Windows 95.

The latest claim of impending doom came in a letter Microsoft's chief financial officer Greg Maffei sent to Wall Street analysts and Microsoft partners. In it, he said a delay would likely bring about "broad, negative consequences not just for Microsoft but also for the entire PC industry." A letter penned last week by top executives at 26 companies made similar predictions.

But not everyone is taking Microsoft's messages to heart.

"This is one of the silliest statements that's come out of Microsoft in years," said Jeff Tarter, publisher of SoftLetter, which follows the software industry. "This is going to be one of the quietest launches Microsoft has ever achieved, and everybody knows it."

Unlike three years ago with Windows 95, he explained, relatively few software and hardware vendors are timing releases around the release of the new operating system.

Chris Le Tocq, an analyst at Dataquest, agreed. "When did Chicken Little become the CFO of Microsoft?" he quipped. "The bottom line is that the sky is not going to fall on anyone's head" if Windows 98 is not released right away.

He added that the biggest sector that would be affected by a delay would be hardware retailers, because they invest more advertising dollars in major software upgrades than other players in the industry. Still, Le Tocq added, "if you're a smart retailer you make contingency plans."

The sentiment was echoed by a number of others, including Mike Boyle, chief executive of Computerland New Mexico, a seller of PCs, software and consulting services. "I see a delay affecting Microsoft's bottom line, but not mine."

But Rob Enderle, who follows Microsoft for Giga Information Group, disagreed. The problem, he said, is the vacuum that will be created if Windows 98 is suddenly pulled out of the industry. While the computer market would easily bounce back if Windows 98 is delayed for a short period of time, "if it extends into the Christmas buying season, it will shift money out of the PC sector into other areas, so that the industry will be irrevocably damaged."

In many ways, it is the technical and marketing circumstances surrounding Windows 98 that conspire to make it a relatively insignificant upgrade.

On the marketing front, Microsoft primarily is aiming the OS solely at the home and consumer market, not the larger corporate and business customers. For the most part, Windows 98 is not even being marketed as an interim upgrade for corporate users or as the OS of choice for smaller businesses.

"The message from Microsoft is that NT is the platform for business, whether you are large or small," said an executive at a major computer vendor. "Windows 98 is strictly a consumer product. Business users should migrate toward NT 5.0 and NT 4.0 is the best way to get there."

Even as a consumer platform, the OS will enjoy a relatively short life span. Microsoft has already said that Windows 98 will be followed by a consumer version of Windows NT in two to three years and not another DOS-based operating system.

Technically, the new operating system does not present the sort of great leap forward to excite consumers, software vendors, or computer vendors, For hardware vendors, for example, the new OS does not contain enough new features to prompt customers to upgrade their systems, said Roger Kay, computer analyst with International Data Corporation.

"It doesn't require a hardware upgrade, so as far as being a compelling reason to buy a new computer, it is not it," he added. "I don't think there is still any excitement about Windows 98."

However, Robert Levin, vice president of product marketing at NEC Computer Systems, countered that the OS will provide some benefits to mobile users. Power management will be more comprehensive than on Windows 95, while the multiple monitor function also will likely find its adherents.

NEC will offer both Windows 95 and 98 on its corporate systems and notebooks upon release. Both will likely be available for some time, he added, because corporate customers migrate to new platforms slowly and reluctantly.

"There is no intent on Microsoft's part to my understanding not to deliver WIndows 95 a year down the road," Levin noted.

Microsoft software developers also have soft-pedaled their product updates for Windows 98. Lotus, Corel, Intuit, and Borland all said in March that while their new products will be compatible with Windows 98, they are not planning specific updates to accommodate the upgraded operating system.

"To be honest, we haven't received a lot of questions about Windows 98 at this point specifically," a Borland spokesman told CNET's NEWS.COM on March 26. "Windows 95 was different because it was a brand new OS [operating system] in a lot of ways. We were pretty much in sync with the development cycle for Windows 95. We're not on that same scale as far as an upgrade goes."

For consumers, the appeal is similarly muted. One of Windows 98's big promises is that it will accommodate a TV tuner card that will allow users to watch TV on their PCs. As "space age" as the concept sounds, convergence technology such as this has not gone over well.