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Win98 a Bust
WinNT 5 Goes Belly-Up for Double Zero's

By: not Peter H. Lewis
of the New York Times


April 2, 1999

A year ago, we (NYT) wrote in this column ("Clan Macintosh Feels the Pain," 4/2/98) that "even Mac lovers have started to switch to the dark side," and wish now that we didn't have to eat those words.

Win98 (at one time, "Win96", then "Win97") is now Windows99. Oh sure, the second beta-version shipped to the public in mid '98 with the name Win'98 (and was only two years late) -- but the working OSR2 version (the one that works) still doesn't have a release date set. The much-ballyhoo'd, WindowsNT 5.0 is scheduled to ship any year now, but the beta's, with it's 30 million lines of code, has turned out to be infested with bugs -- especially the intermittent crashing and unpredictable behavior when it encounters dates in the year 2000, just ten months away. The price point of WinNT 5 -- $499 per seat -- is also proving extremely problematic in the marketplace. Meanwhile, some users are still waiting for Cairo, the much anticipated Object-Oriented version of WinNT -- originally scheduled for 1993, now due to ship, "Well before the next millenium problem".

A Fight To Remember

Windows users and Intel-compatible software and hardware manufacturers have grown less and less confident this past year, as some who once extolled the price and popularity advantages of the Wintel environment have seen their enormous market share decline for the first time in recent history. One emailed comment (whose author requested anonymity) said it best:

"At first we thought the maintenance cost comparisons of Wintel and MacOS machines would die a quiet death, cause we managed to get the most important trade journals to ignore them. But when the Wall Street Journal and the New York Times began attacking us with those same figures, and calling into play issues about functionality, warranty, and breach of fiduciary duty -- well, we knew we had a fight on our hands."

Late Night Calls

Although market sales trends appear to indicate that's a fight that WinTel users and manufacturers are losing, several industry mavens wouldn't speak to us even off the record, out of respect for the still-frightening market control exerted by the powerful advertising budgets of both Microsoft and Intel. Bill Gates, President and former CEO of Microsoft, was "on sabbatical" in light of industry concerns with the failure to release Win98 and the dramatic failure of WindowsNT 5 -- both he and his personal assistant Tsutomu Shimomura were unavailable for comment, and Microsoft spokespersons didn't return our calls by press time. Some of the pundits claimed that people loyal to the old guard at both Intel and Microsoft have been known to place anonymous phone calls to executives late at night, threatening reduced advertising expenditures or restrictive software covenants as pay back for unfavorable public comments.

But sales figures aren't subject to the same level of alleged intimidation: Apple's new network server software Rhapsody has pummeled corporate sales of WindowsNT 5. In a shocking turnabout, Rhapsody sales total 300,000 units in the first 10 months of release -- roughly 1,000 units per day (including weekends) in an extremely competitive corporate market.

Plug 'N' Pray?

Several people contacted for this article pointed to a single event as the beginning of the end for the Microsoft empire: on April 20, 1998, during a software demonstration of Windows98 (which began life as Windows97), a Microsoft employee connected a scanner to a Compaq computer while Bill Gates described the operating shell's improved "plug 'n' play" capabilities to the audience. Much to Gates' chagrin, not to mention the employee's embarassment, the Compaq Pentium 300 machine crashed immediately, and required reinstallation of Windows98, which was then just four weeks from release.

With that, Gates remarked to the crowd, "Windows98 still has some bugs in it, which is why we're not releasing it until June [of 1998]." The murmur that ran through the crowd signaled their acknowledgement that the "$50 Billion Dollar Man" had just shifted the release date of Win98 30 days with no advance industry notice. Several analysts were seen headed for the lobby with cell phones in hand to relay the shocking delay to their parent organizations.


Dave Tremblay, a former Apple executive who is now a senior industry analyst for Computer Intelligence, a market research firm in La Jolla, California told us, "I predicted last year that Apple was a company in danger of disappearing, and I guess I was wrong -- I had no idea that Rhapsody would be the "NT-Killer" it's turned out to be." Mr. Tremblay also had no way of knowing that Win97/98/99 was yet another example of the dreaded "vaporware" that early Microsoft critics began pointing to 10 years ago, with Word version 3.

Interim CEO

According to Tremblay, the very statistics that led him to predict Apple's slide "into oblivion" have virtually completely reversed: Microsoft's stock now sells in the mid-40s, while Apple's stock has split once in the past year, and closed at 81 and 1/8th last Friday, nearly triple its sell price as of April 1998.

And from the "turnabout-is-fair-play" department, Apple recently invested US$250 million in the not-yet-struggling software maker in Redmond, and played a significant role in the selection of its interim CEO, John Warnock. Although no one would speak for the record, insiders suggest that Apple's role in forcing Bill Gates out of Microsoft was reminiscent of John Sculley's ouster of Steve Jobs from Apple in the mid-1980s, and of Steve Jobs' ouster of Gil Amelio in 1997.

Hiawatha Bray, former Boston Globe reporter and now Director of Public Relations for Microsoft, shown as contact person for the press relase, wrote: "John Warnock's long and productive tenure with Adobe allowed him to create effective, forward-looking partnerships with all of the key players in the software industry. We're confident that Mr. Warnock's stay here at Microsoft will be a long and prosperous one." Mr. Bray wouldn't comment on questions concerning Apple's role in the switch, saying only that "new leadership will reinvigorate Microsoft, and we fully expect to continue our visionary role in software production."

" -- Not Very."

Industry analysts who answered our calls would only speak with us off the record on the fate of Microsoft's former chairman Bill Gates. Even though his massive fortune has declined more than 65% in the past eight months during Microsoft's stock price slide, the former "$50 Billion Dollar Man" remains one of the world's hundred richest individuals and a formidable adversary. "How sad do I feel for one of the world's richest men? Not very," said one scene-ster. "We all warned Microsoft about the coming rejection of operating system and application bloatware by corporate and consumer buyers -- they chose to ignore the will of the buying public. Now he's got a lot of time to gaze out those electronic windows of his &endash; at least until the bank takes back its 72 million dollar mortgage." Another commentator said she "knew the writing was on the wall when 30 million lines of code in NT 5 couldn't handle Y2K problems -- we were counting on NT 5 to save our bacon, and instead, we're the bacon."

While some in the industry may gloat at the prospect, Mr. Gates is in no danger of losing his palatial home. Unlike days gone by, however, invitations issued to trade journalists and even popular "cybercolumnists" like John Markoff for conferences held at the Gates' estate go into the bit bucket without so much as an RSVP. (Mr. Markoff had not returned any of our seven phone calls by the time this article went to press.)

A Nightmare of Incompatibilities

Before the devastating and unexpected shift in Win98's release date, some commentators pointed to the article by CMP Publications "Windows" magazine in April 1998 as representing a real turning point in corporate MIS executives' opinions about Microsoft products. Then Editor-in-Chief Mike Elgan wrote at the time in "An Open Letter to Bill Gates" that "Windows is a nightmare of bugs, incompatibilities, and inconsistent user interfaces." Within a week of its publication, Mr. Elgan had been transferred to the Cobol desk, where his assignment was to review all new releases of Cobol software and the effect it would have on Windows98. Since no new Cobol software has been released in 20 years, and Win98 is now Win99, Mr. Elgan took his cue and made as graceful an exit as he could under the circumstances.

Returning our call from the office of his consulting firm in Redmond, Mr. Elgan seconded the notion voiced by other industry commentators: that Microsoft thought they could ignore the trend away from bloatware in the same manner they ignored Apple's lead in Internet connectivity.

Rhapsody in Blue

"You can't pull the same rabbit out of the same hat twice," Mr. Elgan told us. "Microsoft just barely turned itself around when the Internet "blew up" in 1994, but the criticisms directed at Microsoft for its software excesses and its monopolistic practices by Congress, by the media, and by consumers themselves represented a fundamental sea change in public opinion that they couldn't overcome. In a way, it's kind of sad, but that's old history now." Mr. Elgan is CEO and President of Rhapsody in Blue, a consulting service focused on Rhapsody (and Mac OS-X) based enterprise server solutions.

This article reported with help from our Washington, Cupertino, and New York bureaus, and with special assistance from Jodi Mardesich of the San Jose Mercury News.

The credit for this article does not belong to David Every, the real author would like to remain anonymous.

Created: 05/05/98
Updated: 11/09/02

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