Windows Me Officially Launched

Sept. 14, 2000 -- Microsoft formally launched the latest version of its Windowsoperating system for home users today, and by stuffing the softwarewith new music, movie and Internet features, it is echoing astrategy that has already landed it in legal hot water.

Windows Me, short for Windows Millennium Edition, is thesuccessor to last year’s Windows 98 Second Edition, but it is nota huge leap over its predecessor, analysts say.

Instead, it plugs a gap in the Windows product line untilnext year, when Microsoft is set to unify the business andconsumer versions of its core product in a long-awaited move.

“I really just see it as a place holder, it’s really not allthat important,” Dwight Davis, an analyst with Summit Strategies,said of Windows Me.

Last OS to Be DOS-Based

Windows Me will be Microsoft’s last operating system based onits 20-year-old DOS programming technology.

Windows 2000, the powerful corporate operating systemlaunched in February, is based on Microsoft’s NT technology,which is much more stable and secure than DOS.

Originally, the company was to have scrapped DOS by now, butit faced mounting technical challenges in adapting NT to includeconsumer-friendly features, such as video games.

“It comes out at sort of this strange time in the company’sproduct evolution, the last gasp of the DOS line and Windows 98,”Davis said.

Multimedia Takes Center Stage

Windows Me isn’t considered a must-have upgrade, but it addsnew programmes, such as a music player that can record, store andplay songs.

Also included are tools for editing home movies, built-insupport for home networking, and a “system restore” feature thatreturns the PC to an earlier state if it crashes.

“It’s designed solely with the home user in mind,” JohnFrederiksen, general manager of Microsoft PC Experience Groupthat oversees PC versions of Windows, said in an interview.

As digital music players, digital cameras and other suchgadgets catch on, Microsoft wants to make the PC act as a hub forother kinds of computing activities, Frederiksen said.

“Overall, these new devices are really adding to the value ofthe Windows PC and allowing the PC to be a great creativitycenter,” Frederiksen said.

Netscape Revisited?

The media player takes clear aim at Microsoft’s cross-townrival, RealNetworks Inc. (RNWK.O), which makes some of the mostpopular media software and helped pioneer the market for audioand video on the Internet.

“Interestingly, it sort of raises some of the issues aboutMicrosoft bundling features into the operating system, which ofcourse has been core to the whole antitrust issue,” said Davis ofSummit Strategies.

In June, a federal judge found Microsoft guilty of breakingantitrust law by using its monopoly in Windows to try to crushrival Netscape, which made software for browsing the Internet.Microsoft started bundling its own browser in with Windows.

Microsoft says it did nothing wrong and is appealing theruling, which would split the company in two. The Supreme Courtis expected to decide soon whether to hear the appeal directly orlet a lower appeals court take it first.

“To bundle in [more software] looks to me like a very riskything to do. They seem to want to get audio and video playersinto the operating system before they get to the Supreme Court incase the court orders them not to,” said Brian Livingston, authorof the book Windows Me Secrets.

The Road to .Net

Even if current Windows 98 users don’t shell out the $59charged for an upgrade, Windows Me is still expected to do wellsince most PC makers will include it with almost all newcomputers going out their doors.

With consumer confidence still buoyant in a strong economy,Microsoft could sell 100 million copies of Windows Me over thenext year and half, Livingston projects.

“This kind of penetration is what Microsoft sees as far moreimportant than people buying it as upgrades in the store,”Livingston said.

Many people, however, are expected to hold out until theNT-based consumer Windows, being developed under the code-name“Whistler,” becomes available.

Whistler will also weave in the first threads of Microsoft’snew “.NET” strategy to retool its entire product line for theInternet and start delivering software as a subscription servicerather than in shrink-wrapped boxes.

Whistler will make it easier for users to swap data betweendevices, and will blur the line between using a PC and using theInternet, Frederiksen said.

“The online experience is changing from one of passive, whereyou go to the Web, to more active, where you programme your Websites,” Frederiksen said.

But for now, Microsoft is pumping the Me generation.

“Our message is that Windows Me is a timely upgrade,”Frederiksen said. “Our focus between now and the end of year isreally about communicating the great products that are availabletoday.”