WINDOWS 98: THROUGH THE GLASS HAZILY

LIKE A PAIR OF sumo wrestlers, the combatants had been trading glares, probing for weaknesses, weighing chances. On May 18, they finally locked horns. Trustbusters for the U.S. Justice Department filed a long-anticipated antitrust lawsuit against Microsoft, the world's largest software company - and, according to the more melodramatic of observers, the computer industry may never be the same.

Should the U.S. government eventually prevail, the suit could significantly alter the way Microsoft develops and markets its ubiquitous Windows operating system, software that controls essential functions of 90% of all desktop computers sold. But the impact on ordinary computer users is likely to be slight - at least for now.

Worst case scenario: The launch of Windows 98 - the upgrade to Windows 95 - will be delayed. Microsoft says it intends to begin worldwide sales of Windows 98 on June 25. A Chinese-language version is to be available in August or September. But the U.S. Justice Department could spoil the launch party. It has sought a preliminary injunction that would require Microsoft to either include Netscape's Internet browser with Windows 98 or remove Microsoft's own Internet Explorer browser. For Microsoft, the former is unthinkable, the latter undoable. The company claims that in Windows 98, the browser code is inextricably woven through the operating system. In Windows 95, the browser was more or less tacked on.

Predictably, Bill Gates, Microsoft's feisty chairman, doesn't want regulators dictating what features are integrated into his software. He called the lawsuit "a step backward for America, consumers and for the PC industry." Still, the browser brouhaha is at the core of the department's case against Microsoft.

Among other charges, government lawyers contend the company uses its de facto monopoly of operating systems to squeeze out competition - violating a key U.S. antitrust law. While monopolies are not inherently illegal, they argue that it is anti-competitive for firms to use monopoly power to force their way into other businesses. Netscape, which spied a commercial opportunity in Internet browsers long before Microsoft, provides a perfect test case. U.S. officials allege Microsoft has slashed Netscape's market share from 90% to 60% through illegal acts such as threatening computer makers with the loss of crucial Windows 95 licenses if they install Netscape's browser in new machines.

Moreover, regulators fear that by making Internet Explorer integral to Windows 98, Microsoft will render other browsers superfluous - effectively finishing off Netscape. In fact, Microsoft can use the same technique to vanquish competitors in other arenas, they contend. If an upstart devises successful voice-recognition software, for example, Microsoft can capture that market, too, simply by building voice recognition into an operating system for which there is no practical alternative. "Consumers and computer manufacturers should have the right to choose the software they want installed on their personal computers," said U.S. Attorney General Janet Reno.

Antitrust cases are notoriously complex and litigation is often protracted. And Microsoft claims that a delayed debut of Windows 98 could not only hurt the computer industry but also the U.S. economy. Certainly the launch of Windows 95 three years ago encouraged tens of thousands of PC enthusiasts to buy new software programs and more powerful machines to take advantage of the operating system's additional bells and whistles.

But Windows 95 was radically different from predecessors - the improved user interface alone made it worthwhile for most people to upgrade. Advance reviews of Windows 98 say that though it is better than Windows 95, refinements are subtle. Among them: a new data-storage system that, Microsoft says, provides users with up to 28% more disk space; improved compatibility with peripherals such as modems; a feature that allows two monitors to run simultaneously on one machine.

Those features may not be enough to spark a rush to Windows 98. Besides, Microsoft expects to release next year a new version of its heavy-duty NT operating system, which could replace Windows on most desktops. A study by market research firm International Data Corp. found that consumers "are confused whether Windows 98, Windows NT Workstation 5.0, or some other technology is the best choice. When confused, business decision-makers wait for the dust to settle." Add an antitrust suit, and the Windows picture looks hazy for the forseeable future.

Slightly faster start-up and shutdown

Improved hardware support, including support for DVD(digital video disk)

Better power management for laptops

More efficient data storage

Greater reliability

No killer features - same interface as Windows 95 with Internet Explorer 4.0