Windows 98 remains on schedule for its June 25 launch, the company said.
The operating system has been the focal point of the legal battle between Microsoft and federal and state prosecutors.
Microsoft had planned to ship Windows 98 to PC makers on Friday, but it agreed to postpone the date until Monday while the two sides worked out their differences.
Under last week's agreement, Microsoft agreed not ship Windows 98, and the Justice Department and states agreed not to file any lawsuits against the software maker. Now all bets are off.
"We negotiated in good faith from the beginning," said William Neukom, senior vice president for law and corporate affairs at Microsoft. "The government's theories for the personal computer industry were not in the interest of PC users."
Microsoft and its partners have predicted dire economic consequences if Windows 98 did not ship on time. This included a letter-writing campaign to federal and state prosecutors by the chief executives of Intel, Hewlett-Packard, and Compaq, among others.
A recent report from International Data Corporation, however, predicted that sales of Windows 98 will fall by 15 percent compared to early sales of Windows 95. Microsoft will ship 12.8 million copies of Windows 98 this year, compared to 19.5 million shipments of Windows 95 in 1995, the report said.
PC vendors, for their part, say they are proceeding under the assumption Windows 98 will launch on June 25 by conducting normal testing and installation of the operating system.
"Any speculation at this point is premature, at best," said T.R. Reid, a spokesman for Dell Computer. "The public release date of Windows 98 is June 25. Our plans haven't changed in that regard and won't unless there's some new definitive information."
Any changes to the screens shown at boot-up would come from Microsoft. "We're not planning for any changes in configuration or timing at this point," he added.
IBM has decided to continue to sell machines loaded with Windows 95 with a coupon for a free Windows 98 upgrade through the end of June, according to Jim Bartlett, vice president for Aptiva marketing. Big Blue will offer systems with Windows 98 on July 1.
Neither company would elaborate on any contingency plans in case the launch of Windows 98 is delayed. Gateway would not comment at all on the matter but has also been offering a rebate coupon for Windows 98 with its machines since April.