Memo: Windows 98 was delayed to beat Netscape

One of the more interesting facets of the current antitrust case againstMicrosoft is the almost daily release of new information courtesy of thegovernment, including email and memos written between executives and programmers at the software giant. While some of these documents seem a bitarbitrary, some actually cast a shadow over Microsoft's chances in thetrial. And some are just plain ugly.

Particularly damning is an interesting exchange between senior VP Jim Allchin and Paul Maritz, a group vice president, from January 1997. At thattime, the two were debating strategy for Microsoft's Internet Explorer, which was then lagging way behind market leader Netscape Navigator. Microsoft was then working on the follow-up to Windows 95, which was code-named "Memphis." It was due to be released that summer as Windows 97.

"I do not feel that we are going to win on our current path," Allchin wrotein an email to Maritz. "I am convinced we have to use Windows--this is theone thing [Netscape doesn't] have."

Maritz responded: "If you agree that Windows is a huge asset, then itfollows quickly that we are not investing sufficiently in finding ways totie I.E. and Windows together."

Allchin liked the suggestion he was hearing. The better the integration ofIE and Windows, "the more Netscape will be cut off."

And with that simple email exchange, the future of Windows was changed,perhaps forever. Memphis, was which then seen largely as a small OSR-typeupgrade (adding drivers for newer hardware and technology, but nothingdramatic) was morphed into an integrated Internet wunderkind that laterbecame known as Windows 98. Furthermore, beating Netscape was such a priority for Microsoft that Memphis was delayed over a year, specifically so Microsoft could pull off this IE/Windows integration.

"[Delaying Windows 98 so that IE can be integrated] is the only thing thatmakes sense even if [PC makers] suffer," Allchin wrote.

Maritz agreed: Windows 98 would be delayed "even if it means missing theOEM window" [the 1997 Christmas season, which is crucial for hardware makers].

In early 1997, Microsoft began hinting that Memphis would be delayed,though it never publicly said why. According to the government, the April1997 purchase of WebTV also delayed Memphis when the company decided tointegrate WebTV software into the operating system. Another interestingside effect to this delay, incidentally, was the development of Windows 95OSR 2.5, a version of Windows 95 that was given to hardware makers in early1998. OSR 2.5 included a bundled version of IE 4.0, just like Windows 98, and new drivers so that PC makers could more easily sell systems with the latest features while they waited on Windows 98. One can assume that the OSR 2.5 release occurred specifically to quiet the growing anger from PC makers