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Windows 98 may not be windfall

Computer makers and consumers are lukewarm about the operating system's upgrade, at best.

The release of Windows 98 may not be delayed by the Justice Department, but its arrival may elicit no more than a tepid response from companies and consumers.

Microsoft's oft-delayed upgrade to its operating system may not be a compelling buy for consumers, analysts say, while its rollout will cost PC makers as they begin testing hardware designs to make sure the software works.

Windows 98 is an upgrade of Windows 95 that is slated to include an integrated Web browser, a television tuner and program guide, faster application loading, and built-in support for multiple monitors, DVD, and universal serial bus connections. The browser will let users view local, network, and Internet data without switching applications.

"It's less of a must-have [than Windows 95] but still will generate publicity in the marketplace," said Kevin Hause, an analyst International Data Corporation.

Microsoft is reportedly preparing a June launch of Windows 98, but that could change if the company decides to change the features offered.

Some PC manufacturers are less than enthusiastic about offering the new operating system to customers. A source at one top-tier computer company was particularly downbeat, saying: "We would love to be able to say we can do a bunch of neat things to hardware and software designs, but there's really nothing new [with Windows 98]. It's late, there's no compelling consumer value to it, and it's costly to transition to a new OS."

Computer makers must test all of the permutations of a hardware design to make sure that new software works properly, a process that is time-consuming and expensive. Microsoft, however, isn't expected to make any major adjustments in the price of the operating system to speed its release.

While original equipment manufacturer contracts with Microsoft are closely held secrets, IDC analyst Dan Kusnetsky says he has heard that pricing will be in the $50-to-$70 range in large volumes, which is roughly on par with current OS pricing. "My sense is that [operating system pricing] is quantity-based. If a vendor commits to sell enough software, the pricing can be attractive," he said.

Dell Computer is one company that thinks Windows 98 itself will attract consumers. "Microsoft is very good at knowing what customers want and good at offering complete improvements to products," Dell spokesman Bill Robbins said.

Robbins notes that offering consumer and small business systems with Windows 98 is "an extreme high priority" for the company and that the transition from Windows 95 to Windows 98 should be rapidly completed.

Other PC manufacturers may grouse, but in the end they too will eventually have to make the transition.

"All vendors are going to have to adopt Windows 98 in consumer systems anyway," Hause said. "Anybody who doesn't is perceived to be behind the curve."