Gates: Windows 98 delay would be a disaster

So said Microsoft Chairman and CEO Bill Gates yesterday at a New York pep rally for Windows 98. The rally was organised to dissuade state governments and the U.S. Department of Justice from preventing Microsoft's release of Windows 98 with the Internet Explorer browser.

Gates said a government crackdown would affect an entire "ecosystem" of companies that depend upon Microsoft to make money. "It would hurt the American economy and would cost Americans jobs," he said.

But some observers say such comments are actually ammunition for Microsoft opponents, who are trying to convince the government that Microsoft has a dangerous hold on both the computer industry and the economy in general.

Last week, Microsoft partners, including Intel and Compaq, sent a letter to the DOJ saying government interference with the shipment of Windows 98 could have dire consequences.

"It's almost giving fuel to Microsoft's opponents," said Jim Balderston, an analyst at Zona Research in the US.

If so, the fires will burn plenty high after the rally. In addition to Gates, speakers included Compaq CEO Eckhard Pfeiffer, CompUSA president and CEO Jim Halpin, Storm Technology president and CEO Bill Krause, Visio chief technology officer Ted Johnson and N. Gregory Mankiw, a Harvard University economics professor. Most of them pounded home the theme that if the government were to stop Microsoft from shipping Windows 98 on June 25, it would have significant impact on consumers and the U.S. economy.

"It would undermine our ability to meet demand when students return to school," which is a key selling time for the PC industry, Pfeiffer said, adding that "I don't think we can deprive consumers of the tremendous value" that Windows 98 would bring them.

During a brief question-and-answer session that followed, Gates was asked if the rally wasn't an overreaction to the situation at hand and what he thought the odds were that state or federal officials would enjoin Windows 98.

"I'm not an oddsmaker. ... Certainly there's a lot of government resources at both the state and federal level, trying to scour up any kind of theory here," he said. "This is a very serious situation. [An injunction] is under serious consideration."

At least one government figure characterised Microsoft's recent actions as "self-serving spin".

"It's hardly surprising when a powerful firm with a monopoly market position claims the economic sky will fall if it is not left alone by regulators. That's the last refuge of corporate self-preservation," said Massachusetts Attorney General Scott Harshbarger in a statement today. Harshbarger added that "self-serving spin will not deter antitrust enforcers from protecting consumers who want more economic choices in a competitive marketplace."

Massachusetts is one of the more active of the dozen states that are expected to seek an injunction against Microsoft.