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Wednesday, May 20, 1998 Published at 18:40 GMT 19:40 UK

Biz: The Company File

Where does Microsoft go now?
image: [ Bill Gates looks concerned after the lawsuit is announced, but he has little to worry about ]
Bill Gates looks concerned after the lawsuit is announced, but he has little to worry about

Microsoft has already started to ship its new Windows 98 operating system to computer makers and shops, despite the latest series of lawsuits against it.

The company says it does not plan to delay the planned launch of the new operating system in June and industry watchers believe it will probably not be forced to.

Neil Herman, an analyst at investment firm Salomon Smith Barney, estimated there was a "about a 1% chance" of this happening.

[ image: Microsoft has been promoting Windows 98 heavily, but there is little corporate enthusiasm]
Microsoft has been promoting Windows 98 heavily, but there is little corporate enthusiasm
If the injunction called for in the lawsuit is upheld, Microsoft would have to withdraw and re-work its product.

But the impact of a delay would still be slight.

According to Rupert Goodwins, Technical Editor of IT Week magazine, there is "massive corporate indifference" to Windows 98 in the UK.

He said he has not heard of any companies planning to switch its computers to run it immediately.

Aside from the integration of Microsoft's Web browser into the operating system, he characterises Windows 98 as, "Windows 95 plus a few bug fixes."

Windows 98 is not the only target

If the suit affected the development of Microsoft's NT 5.0 operating system, or its application software, it could be more serious.

Windows NT is Microsoft's "next generation" operating system, which analysts predict will eventually replace Windows 98 altogether - at least in business.

Windows NT 5.0 is already later than expected due to technical hitches - though Microsoft has never formally announced a release date.

Even before the lawsuits began, it was not expected to ship before the middle of 1999.

[ image: Sun's Java suit adds to Microsoft's legal burdens]
Sun's Java suit adds to Microsoft's legal burdens
The Gartner Group of IT analysts says many corporations will not be making any major changes before the second half of the year 2000.

It recommends that most companies should not upgrade to Windows NT 5.0 before the end of 2000 as they will have their hands full with the millennium bug.

While the Department of Justice lawsuit deals primarily with the operating system, the lawsuits brought by 20 US states also make claims that Microsoft has abused its power when promoting its Microsoft Office software and Outlook e-mail program.

Microsoft gets a sizeable portion of its revenues from sales of its Office programs, but it is not yet clear to what extent this is threatened by the lawsuits.

Sun Microsystems has also lodged a separate lawsuit to try to force Microsoft to ship Windows 98 with a compatible version of the Java programming language.

Overall, Microsoft is not expected to suffer too much financially from the cost of this suit.

Microsoft has resources for a long fight

Microsoft's shares dropped by 4% when the suit was announced. But they are still a third higher than at the beginning of the year.

Microsoft made nearly $3.5bn in 1997 and even after its share price dropped the company is valued at more than $200bn.

The legal fees from a lengthy knock-down, drag-out fight with 20 states and the federal government are unlikely to make a significant dent in its revenues.

Although one computing analyst has called the latest series of Microsoft lawsuits, "a full employment programme for American lawyers," they may cause surprisingly little damage to the computing giant.

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