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Microsoft mounts offensive for Windows 98

In a race against antitrust officials, Microsoft Corp. is struggling to rally public support for the on-time release of its new Windows software. But reaction so far to its campaign is mixed.

Microsoft plans to lay out for the media today why it thinks any delay in Windows 98 would hurt the computer industry. Chairman Bill Gates and major industry executives, including Compaq Computer Corp. chief executive Eckhard Pfeiffer, are expected to attend.

The event follows two extraordinary warnings in recent days by Microsoft and other major technology companies reliant on Windows for their products. Letters to the Wall Street community and federal prosecutors said any delay in the software release could cause wide suffering in the personal computer industry and in the broader economy.

Microsoft is worried that a group of state attorneys general will try to block the mid-May shipment of Windows 98 to PC makers; the software upgrade is expected on retail shelves June 25. But any impact from Microsoft's attempt to rally support so far is unclear.

"The Microsoft public relations and lobbying effort clearly is well orchestrated and well organized," said Richard Blumenthal, Connecticut's attorney general and part of the group investigating Microsoft.

"But I think its effect will be fairly limited, because our decision really has to be made on the merits of all the evidence we've amassed and the public interest," he said.

Investors had little reaction to the company's letter on Sunday to 150 stock analysts, software companies and venture capitalists, which warned of "broad, negative consequences" for the entire personal computer industry if Microsoft's software release is delayed.

Compaq's stock on Monday was up 2 percent, Dell Computer Corp. was up 4.5 percent, and the Nasdaq, which is heavily weighted to technology companies, rose 5.42 to 1,878.86. A big exception was Microsoft stock, which was down 1.7 percent, or $1.56\, at $88.06\.

Several analysts said any impact from a delay in Windows 98 likely will be limited to a slight, temporary falloff in PC sales.

Consumers are not expected to rush out to buy computers just because they run on Windows 98 since the operating system contains far fewer improvements than the Windows 95 system it replaces. Companies that could be hurt are makers of computer accessories, such as game joysticks and scanners, since the new operating system makes it easier for users to hook up peripherals.

"I don't think (Windows 98) will be anywhere as significant as Microsoft says it is," said Michael Murphy, an independent industry analyst in San Francisco.

For its part, Microsoft publicly says the government ultimately will come out on its side. The government is trying to determine whether Microsoft is unfairly using its dominance as a maker of operating software to shut out rivals. Microsoft wants to continue integrating into its software new features like the Internet browser that is woven into Windows 98.

Gates, in a speech Monday at a cable TV industry trade show in Atlanta, said he was confident that the government won't restrict it or other technology companies.

Gates said that "assuming the political process works, which it generally does, (the government) will let that industry do what they want."