"I'm not expecting it to have anywhere near as big an impact as Windows 95," says David Card, an analyst at Jupiter Media Metrix in New York, referring
to the wildly successful operating system Microsoft introduced with a huge
ad campaign six years ago.
As in 1995, the software giant is rolling out its highly touted new operating
system for personal computers with a public-relations blitz that compares
— in expense, anyway — to any in corporate history.
Microsoft is holding launch events in 63 cities, with the main rollout
taking place in New York, where the company's co-founder, Bill Gates, is
unveiling Windows XP and Sting will give a free concert in midtown Manhattan.
Television ads featuring Madonna's "Ray of Light" will be airing on the
heels of spots already on television touting the online Microsoft network.
All told, the promotional campaign may cost Microsoft $250 million, far
more than virtually any other high-tech company could even contemplate
spending on promoting a product.
Why Buy?
Still, Windows XP, which contains a variety of new multimedia features
and retails for around $100, faces a struggle to attain smash-hit status,
despite its generally favorable product reviews. With the new system, users
have built-in applications for instant messaging and a host of multimedia
features, including viewing video clips, playing and recording CDs and
editing digital photos.
It is also based on the Windows 2000 source code, which keeps the system
running even when one application crashes, removing a major complaint users
have about Microsoft's products.
But a lot has changed in the six years since Microsoft rolled out Windows
95. Computer sales have hit a historic trough, the economy is floundering
and the United States is under assault from terrorists.
And if that weren't enough, there remains one huge difference between 1995
and 2001: six years ago the commercial Internet, still in its early years,
gave consumers a huge incentive to upgrade to a Web-ready operating system.
But now, there is no corresponding "killer application" to boost sales.
"It's a Windows 95 rollout in everything but the product," says analyst
Charles Smulders of Gartner Dataquest in California. "XP has nice features,
and it's a more stable system, but the product isn't the compelling product
Windows 95 was."
Ubiquitous in the Long Run
Microsoft's operating systems run on more than 90 percent of the world's
personal computers, and even if XP falls short of the company's highest
expectations for its initial release, the product still figures to become
highly successful.
"Every new machine that goes out the door will have XP on it," notes Card,
who expects the system to become ubiquitous "by attrition."
And the system has generated controversy, too. The new Microsoft "Passport"
which allows users to have one password for all Internet services has generated
Web-privacy concerns, while the inclusion of so many applications raises
the spectre of the "bundling" issue still being sorted out in the government's
antitrust case against Microsoft.
Computer Makers Seek Boost
The release of Windows XP is a high-stakes event for the personal computer
industry as well, with manufacturers hoping the new system will induce
customers to buy more machines.
When PC sales dipped in the first two quarters of 2001, it was the first
time the industry had seen such a downturn since 1986 — before widespread
use of e-mail, before the World Wide Web, or for that matter before the
user-friendly point-and-click interface became nearly universal in home
computing.
According to Gartner Dataquest's statistics, computer sales have been falling
by 2 percent per quarter in 2001. Gateway, for instance, the nation's fourth-biggest
PC maker, announced a $520 million third-quarter loss this year after making
$132 million during the same time in 2000. But industry observers are doubtful
that XP can turn the computer industry around.
I think it's a difficult upgrade," says Card. "You need a pretty hefty
machine."
Adds Smulders: "It's not going to create a hardware bubble in itself."
Instead, he thinks the direction of the economy will determine how computer
makers fare in the coming months: "There are bigger structural issues that
will determine growth in the PC market."
p;nbsp;the
user-friendly point-and-click interface became nearly universal in home
computing.
According to Gartner Dataquest's statistics, computer sales have been falling
by 2 percent per quarter in 2001. Gateway, for instance, the nation's fourth-biggest
PC maker, announced a $520 million third-quarter loss this year after making
$132 million during the same time in 2000. But industry observers are doubtful
that XP can turn the computer industry around.
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