Steve Ballmer, Microsoft's president, announced the Windows 98 news during his keynote at the Windows Hardware Engineering Conference here.
The consumer revision of Windows will be at the center of a long-term initiative, called the Easy PC Initiative. The joint Intel-Microsoft project will focus on creating a less-complex PC encouraging innovative designs. The PC in this vision completely hides MS-DOS and only uses USB, IEEE 1394, and Device Bay for expansion.
Ballmer declined to give the name of the upcoming consumer OS, but said the system would include new features. Whether the OS can be considered another version of Windows 98 or a new operating system will likely be the subject of many debates over the next two years.
Microsoft, in fact, seems to be debating the issue itself. While Ballmer called the OS a "new version" of Windows 98, a Windows product manager placed it in a "new generation" category.
"Don't think of it as a new version of Windows 98," said Mike Nichols, a Windows product manager. The upcoming OS will be based on the same code, but will contain a number of new features, he said.
Ironically, it was a year ago, at the WinHEC conference, when chief executive Bill Gates announced that Windows 98 would be the last DOS-based operating system, with subsequent versions based on NT.
To date, Microsoft has been tight-lipped about its strategy for the consumer operating system post Windows 98, releasing information yesterday to beta testers about its pricing strategy for an upcoming refresh of Windows 98, Windows 98 StepUp.
Ballmer declared that the death of the PC has been greatly exaggerated. "New devices bring new opportunities and new value and meaning to the PC," he said.
The conference was opened by Carl Stork, general manager of hardware strategy for Microsoft, who welcomed attendees and apologized for the rainy weather, which has turned sunny Los Angeles into a replica of Microsoft's Redmond headquarters. Stork promised to work with the hardware industry to "build the best PC systems, and to work together to build better PC architecture and PC subsystems."
Ballmer then took the stage, outlining Microsoft's vision of the future of corporate and consumer computing. Microsoft's next edition of Windows 98 will be the center of the company's consumer strategy, while Windows 2000 and the upcoming 64-bit version of the platform will drive Microsoft's corporate strategy.
Microsoft was founded on the goal of a personal computer on every desk and in every home, Ballmer said, a goal the company is still far short of, with 50 percent PC penetration in the U.S. On stage, Ballmer dramatically declared the "renewal of the dream," but added that the notion of technology empowerment must now be extended to include many different kinds of Internet appliances.
"There's a good reason to build upon the foundation of the personal computer," he said. "It's brought us all the success we've all had, and the PC is not getting less popular." There will be approximately 100 million PCs sold this year, he said, predicting that PC growth will not slow significantly, although he is personally concerned about the effect of Year 2000 preparedness on PC buying.
Ballmer pointed to business opportunities in the high-end workstation, small-business server, business appliance, and infrastructure hardware markets. "All these are opportunities for innovative hardware design, software design, and innovative sales and marketing," he said. "To take the architecture and extend it."
Microsoft will launch a 64-bit version of Windows "as soon as we can, after the shipment of Windows 2000," he said, noting that both platforms are based on the same code base. The full 64-bit version of Windows will be capable of handling 8 terabytes of memory, compared to 4 gigabytes for the 32-bit version of Windows 2000.
Next generation Windows 2000 shown
Ballmer demonstrated 64-bit Windows 2000 for the first time onstage using SQL server. The 64-bit Windows is based on the same source code as the upcoming Windows 2000, Ballmer stressed, but uses a different method of compiling the code. The 64-bit Windows 2000 performs about 30 times faster than the 32-bit Windows 2000, running SQL Server. Microsoft hardware developers can begin developing for 64-bit platforms today, he said.
"The opportunity is high and the market demand is there," he said.
Ballmer contrasted the opportunities in high-end enterprise computing with advances in simplifying other technologies, including the new Windows Server Appliance. The scaled-down server, which is expected to hit stores this year, will be priced between $1,000 and $2,000 and will allow simple file, print, and Internet sharing without server-based applications.
Ballmer was joined by a Windows product manager who demonstrated how to set up a simple network using the Windows Server Appliance, running on the embedded version of Windows NT. Microsoft has tried to simplify the set-up process, he said, with a streamlined five-minute wizard to help users configure printers, Internet connections, as well as determine TCP/IP addresses.
Overall, consumer opportunities "continue to be as dynamic" a market segment as the corporate market, Ballmer said, but companies must remove complexity, add relevancy, and new appealing form factors that can connect to "everything," he said. "We have to get to the stage where everything just works."
Microsoft has "under-performed"
Ballmer conceded that Microsoft has "under-performed" in this area to date, compared to user expectations. Today's PC is relatively error prone, difficult to use, and available in unexciting designs, he admitted. But Microsoft is undergoing a "rebirth" of its approach to its consumer platform, driven by the company's recent reorganization focusing on specific customer segments.
The PC of tomorrow will be general or single purpose, resembling consumer appliances in ease of use and reliability, he promised, connecting with "everything, everywhere." He demonstrated prototype devices in non-PC shapes, sizes, and colors, including a violet and olive green AMD concept appliance with open CD-ROM drive. "This would probably look OK in my den, but maybe not anyone else's," he said, drawing a laugh from the crowd.
Ballmer also announced 20 new partners for the company's Universal Plug and Play home networking initiative, including consumer electronics companies like Casio, Panasonic, Sanyo, and Sony. Microsoft also today announced the UpnP Forum, an open working group. Keith Laepple, technical evangelist for Microsoft, demonstrated the company's vision of a home network, connecting stereos, VCRs, and phones.
Finally, Ballmer, joined by Daniel Robbins of Microsoft research, demonstrated a 3D User Interface concept the company is working on, featuring a pulsing cursor and a desktop interface resembling a three-dimensional room.
Ballmer deflected prepared questions from the crowd, including inquiries about licensing, networking, and Linux, the rival open source OS. Regarding the open source movement, he contended that hardware manufacturers don't want access to source code because of the added hassle. But Microsoft is "seriously looking" at providing source code to some partners, in response to customer feedback, he said.