Microsoft claims legal victory

Software Appeals court lifts temporary injunction restricting bundling of Internet Explorer with Windows 98.

Microsoft won a surprise victory in its long antitrust battle withling of Internet Explorer with Windows 98. the US government last week when a Washington appeals court lifted the temporary injunction restricting the bundling of Internet Explorer with the Windows 98 operating system.

The US Court of Appeals panel voted two-to-one on 23 June to reject Judge Penfield Jackson's preliminary ruling, on the grounds that it had breached legal procedures and wrongly interpreted a 1995 antitrust agreement.

The court dismissed the US government's attempt to impose a $1 million per day fine as 'attention grabbing' and condemned the appointment of a special advisor, pointing out that there was no place in the US judicial system for a 'surrogate judge'.

The decision, which was announced two days before the retail launch of Windows 98, represents a setback for the US Justice Department.

The bundling issue is a major part of the DoJ's broader suit, which is scheduled to be heard on 8 September.

Microsoft received a further boost which will prove important when the case is addressed in full in September. Two of the appellate judges wrote a legal definition of what constitutes software integration, stating that Windows 95 and Internet Explorer 'have no separate existence' and concluding that the integrated product combined separate functions in a way that was useful for consumers.

Microsoft legal representative Bill Neukom said: 'This does bear on the issues in the Windows 98 litigation. We intend to use this clarifying and guiding opinion from the Court of Appeals to our best advantage as we go forward.'

PC vendors have said they will continue with plans to offer users an alternative, although the ruling allowed Microsoft to require them to carry its Internet Explorer browser with Windows 95.

Packard Bell, NEC and Gateway said they would proceed with plans to offer Netscape Navigator alongside Internet Explorer.

Packard Bell said it would still ship a PC with the Explorer icon hidden and with both browsers supplied on a CD.

The Department of Justice expressed disappointment at the decision but pointed out that one of the three appellate judges had rejected the pro-Microsoft argument and the wider case to be heard in September is concerned with a series of illegal business practice issues.

Wall Street was quick to react to the decision. On 24 June, Microsoft stock was the most active on the market, climbing $4.95 to $100.75 on Nasdaq.

SHOP FRONT

'We opened 17 stores late and started selling Windows 98 from midnight. Between midnight and 1am we sold over 1,000 units.' PC World 'We had 3,000 orders overnight. There was a lot of hype for Windows 95, not for 98, but we're seeing the same level of interest. Tech support lines have been quiet as well, which is good news.' Steve Bennett, Software Warehouse

'We sold 35 today but we didn't push it. A lot of people have already seen IE4 and weren't impressed. It's not such a big leap from Windows 95 to 98. Business users are waiting for NT5.' Raj Morar, Micro Anvika 'We've sold three, that's all. As an OEM product on a machine it will sell. Not that much is new though.' Sam Yildiz, Ucon Megastore

'We're getting enquiries, but not many sales. Customers have not seen a lot of marketing and people are not aware of it. It is not sufficiently different to attract people.' Neil Armani, Gultronics

WINDOWS 98 UK DEBUT UNDERWHELMS RETAILERS Microsoft's victory over the US Department of Justice was followed by a low-key launch of Windows 98, which encountered a mixed response from retailers. Some complained that the lack of Microsoft marketing had created a damp squib of a debut.

The updated operating system sneaked to market under the cover of darkness on 25 June with virtually no fanfare. In store fronts everywhere, there was far more evidence of World Cup 98 than of Windows 98.

However, the multiple retail chains claimed a successful launch, although the smaller independents struggled to sell the software to a public that was more aware of the DoJ case than of the Windows 98 launch.

But Microsoft has already pulled the industry into line. It claims that 200 OEMs will include Windows 98 as standard within 30 days and that 90 per cent of all PCs will ship with Windows 98.

PC World claimed total first-day sales of 5,000, averaging 250 per store, compared with the Windows 95 average of 200. But smaller retailers on London's Tottenham Court Road generally had a slow day and no long queues formed.

One store claimed it had made only three Windows 98 sales.

James Foulk, analyst at IDC, commented: 'It has not been a big razzmatazz launch. It has nothing like the impact of Windows 95 for consumers and corporates are holding out for NT5.'

Microsoft claimed that 250,000 copies of the operating system have been sold but it was unclear how many were OEM, upgrade or full product sales.

'We're getting enquiries, but so far not a lot of sales. Customers have not seen a lot of marketing and a lot of people are not aware of it, those that are, are not aware of its features. It is not sufficiently different to attract people.' - Neil Armani, manager of Guiltronics.