Strong Windows 98 Sales Reported

Early sales of Windows 98 are unexpectedly strong, and Microsoft Corp. may want to thank the federal government for suing the company.

Retailers sold about 530,000 copies of Windows 98 in its first four days and roughly matched the strong sales of the predecessor software, according to a PC Data survey released Tuesday.

The strength seemed surprising after Microsoft's low-key launch last Thursday of a product that was widely viewed as only a minor update to the popular Windows 95 software, which was launched three years ago with far more publicity.

Also dampening expectations this time around, Microsoft is encouraging many businesses to upgrade instead to its Windows NT, a more powerful software for running networks of computers.

But several analysts pointed to the unprecedented controversy surrounding the product as one possible factor helping to publicize its features, such as the integration of a free browser for surfing the Internet.

The Justice Department has charged Microsoft with using its Windows 98 software to foist its other products onto consumers and shut out rival software makers.

"The average consumer maybe didn't know what the benefits were of Windows 95," said Ann Stephens, an analyst at PC Data, a Reston, Va.-based tracker of software sales.

"This time around, they might. Every added feature was debated in the headlines," she said.

"Any publicity is good publicity," added Joe Barkan, an industry analyst with the Gartner Group consulting firm, based in Stamford, Conn.

Analysts cited pent-up demand for computers ahead of the new operating system. Retail sales of software and hardware sagged in May, the month before the Windows 98 release, as consumers apparently withheld their purchases to wait for the latest technology.

To encourage sales of Windows 98, some major retail chains offered steep discounts on computers to the first buyers of Windows 98.

While sales of Microsoft's consumer operating software surged, the company sent out a fresh signal that the latest update to its Windows NT business software would be delayed, which could disrupt some corporate buying plans.

The company, based in Redmond, Wash., said that it planned to release a third public test version of the forthcoming Windows NT 5.0 software later this year. While Microsoft won't say when it plans to finally release the software update, several analysts said the extra test would delay it by at least one quarter, to the second quarter of 1999.

Some are more pessimistic. The Gartner Group consulting firm is telling its corporate clients not to expect Microsoft to release the Windows NT 5.0 upgrade until the first half of 2000.

Written by David E. Kalish