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Partners toe Microsoft line

Microsoft's partners warn regulators that their much-anticipated legal action against the software giant could have serious consequences.

Hoping to stave off lawsuits that could delay the shipment of Windows 98, dozens of Microsoft partners--many from high-profile companies--are warning government regulators that their much-anticipated legal action against the software giant could have serious consequences.

In one letter sent yesterday to the Justice Department, top executives from 26 high-tech companies--including Intel, Compaq Computer, and Hewlett-Packard--urged the agency not to take any action that would delay Windows 98, which is scheduled to be shipped to PC vendors in mid-May and released to consumers June 25.

The signatories of the letter are some of the best-known executives in the computer industry. The list includes Andy Grove, chairman of Intel; Eckhard Pfeiffer, chairman of Compaq; Lew Platt, chairman of Hewlett-Packard; Gordon Eubanks, CEO of Symantec; Joe Daltoso, CEO of Micron; and James Halpin, president of CompUSA.

"The direct effect on the U.S. economy of a delay to Windows 98 would be considerable: More than 2 million Americans, for instance, develop software that runs on Windows, while a similar number work in the computer services industry," the letter stated. "Interfering with the release of Windows 98 would drag down the entire industry's efforts to deliver value to customers and returns to shareholders."

The release of Windows 98 will sharply contrast the rollout of Windows 95 three years ago, when most major software developers wrote upgrades designed to take advantage of the new operating system. By comparison, relatively few software publishers are writing Windows 98 versions of their applications.

Concerns regarding the scheduled upgrade to the ubiquitous Windows operating system come as federal and state antitrust regulators weigh new antitrust actions against Microsoft.

In a separate campaign, the Microsoft Executive Reseller Counsel--a group of large resellers selected by Microsoft to discuss software sales issues--is orchestrating grassroots support for Microsoft, encouraging industry peers to contact their respective attorneys general and governors, urging the halt of any potential actions against the software giant.

Jay Amato, president and chief operating officer of Vanstar, is spearheading the effort on behalf of the Reseller Council--which he said generates revenues of more than $100 billion and employs more than 150,000 workers. He warned that hindering the release of Windows 98 could be disastrous.

"While you can debate a lot of things about Microsoft, its role is extremely important in this industry," he added. "This issue is much bigger than whether or not you slap Microsoft."

While the sentiment of Microsoft's defenders may be sincere, these companies clearly have an interest in defending the software giant.

The Microsoft Executive Reseller Council is made up of about 30 companies worldwide. Each of these companies typically sells millions of dollars in Microsoft products to corporations annually. In addition, they reap strong profits from technology consulting fees.

Many of these companies also have received substantial training and marketing funds from Microsoft during recent years, and more than one of them has received equity investments.

The resellers claim that the idea for the letter-writing campaign was their own. Sources in the group have said that the idea first came to the council during the Microsoft Resellers Executive Summit in Redmond a few months back.

Microsoft spokesman Mark Murray said the company had asked some but not all of the letter writers for support.

"A lot of our partners asked what could they do to help ensure that the government understood the consequences of trying to block or delay the release [of Windows 98], so we worked with those partners to look at ways to get the message out," he added.

One company in particular--Vanstar--has strong ties to Microsoft.

Vanstar has received substantial investments and financial support from Redmond for more than two years. At one point, Microsoft owned close to 5 percent of the Pleasanton, California-based company, according to various sources. This relationship helped Vanstar fund the certification and training of nearly all of its Windows NT specialists. Microsoft continues to own stock in the company.

Amato also is apparently a friend of Steve Ballmer, the executive vice president of Microsoft.