Tuesday, September 16, 1997

Microsoft says release of Windows 98 will be delayed; stock drops

By RORY MARSHALL Associated Press Writer

SEATTLE (AP) - Microsoft Corp. on Monday said it would delay next year's update of its Windows operating software, news that sent its stock plunging more than 5 percent.

Microsoft said the problem was unrelated to any bugs with the Windows 98 release. Instead, the company needs more time to combine two versions of the software into a single product, for computers running Windows 95 and those running the older Windows 3.1.

Still, Wall Street investors blanched on word that Microsoft wouldn't have the software out until next spring instead of by the end of March, as originally planned. Microsoft stock, which was off about $2 ahead of the announcement after an analyst spoke of a delay, fell $7.25 to $130.69 on the Nasdaq Stock Market.

By releasing upgrades for both Windows 95 and 3.1 at the same time, Microsoft says retailers won't have to stock two separate products.

Windows 98, like Windows 95, is being designed to run programs written for earlier versions of the operating software, which runs the basic functions of a computer.

Phil Holden, Windows product manager, said software testers and customers were confused by the prospect of buying two products.

"The net result is it will take longer to do testing," Holden said. The upgrade of its best-selling computer operating system was formerly code-named "Memphis."

Microsoft had said in March that it wouldn't be available until after Christmas.

The new version of Windows won't be the technological leap that marked the introduction of Windows 95 two years ago. But it will integrate Microsoft's Internet Explorer browser into the general operation of the computer, while being more reliable and simpler to operate.

That means a user will not have to pull out of one application and then call up the Web browser to get onto the Internet.

That could mean trouble for Microsoft rival Netscape Communications Corp., maker of the popular Navigator browser, which now has about 70 percent of the browser market vs. Microsoft's 30 percent.

Microsoft estimates about 60 million computers users still rely on Windows 3.1, while 100 million use Windows 95 or Windows NT, a corporate version of the software.

The initial test, or "beta" version, of Windows 98 was released June 30 to a select group of software developers and testers. About 15,000 beta testers are now working with a second version, and a third version is due out later this year, Holden said.

Windows 95 was released in August 1995 after more than a year of delays.