Windows 98 to debut at $109

Microsoft's Windows upgrade will be released June 25 in retail stores at a suggested price of $109, a company executive says.

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Ending months of speculation, Microsoft today confirmed many key details regarding Windows 98, the planned upgrade to its ubiquitous Windows 95 operating system.

Windows 98 will officially roll out on June 25, according to Rob Bennett, group product manager for Windows 98. Copies of the updated operating system (OS) will ship to vendors for installation on their systems in late May.

Consumers who buy the upgrade version of Windows 98 will pay an estimated retail price of $109. Those who have no OS installed on their system will pay $209 for the full version of Windows 98.

After a discount, the upgrade probably will be sold in most stores for $90 to $100, Bennett said.

Windows 98 has already gained notoriety as the focus of an antitrust investigation by the U.S. Justice Department. The government agency contends the software's integrated Web browser and browser-like features violate a 1995 consent decree. Microsoft is contesting the charge.

In Windows 98, users can move back and forth between files just as they would navigate Web sites, by clicking buttons labeled "back" and "forward." Microsoft is also offering a dedicated site which tells users which drivers and patches their system requires and then downloads them to the OS.

These interface changes are incidental, however, compared to updated support for new hardware technologies. Windows 98 features support for a television tuner (for watching TV on the PC), DVD players, and USB (universal serial bus) ports.

Bennett noted that many PC vendors are already shipping machines with DVD players. USB, a "plug-and-play" technology for peripheral devices, is also featured on as many as 60 million systems today, he estimated.

But the TV tuner is a more problematic proposition. To date, no PC makers have said they will offer the TV tuner in systems shipping with Windows 98 on June 25, Bennett said. Consumers will have to purchase and install separate TV tuner cards to take advantage of that feature.

Industry sources familiar with Microsoft strategy say the company is offering hardware vendors cash incentives to include TV tuner circuit boards in their systems. "This will be a boost to [Microsoft's] WebTV," said one source.

Microsoft also outlined other requirements. Users will need a machine with a 486 processor or higher and at least 16MB of memory. A typical configuration of Windows 98 takes up around 120MB of hard drive space, and the most robust configuration could take up to 300MB of hard disk space, according to Bennett.

A bonus for users running Windows 98 is that it will load applications up to one-third faster than on Windows 95, the company asserted. Over time, the OS can monitor which programs are used most frequently, and configure the hard drive to place these files together so they load faster.

Windows 98 also offers a 32-bit version of the File Allocation Table utility, FAT32, which allocates files in clusters of 4K. FAT16, the previous version of the program available with Windows 95, grouped files in clusters of 32K. By grouping files in smaller cluster sizes, less hard drive space is taken up by large clusters of small files.

But Windows 95 users who upgrade their FAT utility along with their OS will find that they cannot uninstall FAT32 to go back to FAT16, Microsoft said. The company is trying to dispel rumors that once FAT32 is installed, the entire Windows 98 OS cannot be uninstalled.

Windows 98 will also include the Active Channel Bar, a menu that guides users directly to certain Web sites, notwithstanding recent reports that future versions of Internet Explorer would drop the feature.

From a legal perspective, a pall hangs over the upcoming release. Federal and state regulators examining the company's business practices still could try to block the product's debut.

Last week, Microsoft executives met with antitrust regulators at the DOJ in Washington to discuss the continuing federal investigation, which has focused on Windows 98 and its integration of the company's Internet browsing technology.

The DOJ contends Microsoft's use of an "effective monopoly" in the computer OS market to make inroads in share of the browser market at the expense of rival Netscape Communications violates Microsoft's 1995 agreement settling antitrust charges.

Such questions aside, the marketing campaign for the launch of Windows 98 will become more visible in the coming months, Bennett said. The low-key approach to promoting the product is not a result of the DOJ's investigation, he added.

Windows 98 will quickly become the standard OS for new personal computers, but company executives have tried to limit expectations as to how many of the nearly 120 million Windows 95 users will be willing to invest the time and money needed to upgrade. "It's a different product, and it's also a different market we're introducing it into," Bennett said. "It's not going to be Windows 95."

The system is in the final stages of testing by 100,000 end users, including 70,000 ordinary consumers who paid about $30 each to get a preview of the product.

Reuters contributed to this report.