Microsoft Unveils Upgrade of PC Operating Software
Microsoft Corp. on Tuesday unveiled a new version of its popular DOS computer operating system that could substantially boost the software company’s revenue as PC users move to upgrade their machines.
Redmond, Wash.-based Microsoft introduced the disk operating system in a lavish rollout aboard a yacht on the Hudson River.
DOS is the basic software used to operate IBM and IBM-compatible personal computers. Older versions of the software are used in about 45 million PCs nationwide.
“We believe this is the largest initial demand in history we’ve seen for a PC software product,” Microsoft Chairman William H. Gates III said in a statement introducing the product.
DOS 5.0 increases the capacity of computers by taking up less memory and offering features to boost performance.
Industry analysts said DOS 5.0 should boost Microsoft’s sales by $200 million or more in the first year. Its revenue was $1.18 billion in the year ended June 30, 1990.
In addition, for the first time Microsoft will distribute the product through computer retailers. It offered previous versions of DOS only through PC manufacturers.
Microsoft suggested an upgrade price of $99.95, but it offered discounts that would make the price as low as $37 to companies upgrading 5,000 or more PCs.
Egghead Discount Software, a chain of software stores, said it will sell the DOS upgrade for $39.95, after rebate, for one month.
The aggressive marketing campaign is aimed at building early acceptance of the system, analysts said.
Mary Meeker, an analyst at Morgan Stanley & Co., said Microsoft could sell up to 8 million units in the first year of DOS 5.0 shipments, generating $240 million in revenue.
That would make DOS 5.0 by itself equal in size to SAS Institute Inc., the nation’s ninth-largest independent computer software producer.
SAS had 1990 revenue of $240.2 million, according to InformationWeek, an industry magazine.
Shares of Microsoft rose 12.5 cents to $110.625 in over-the-counter trading.
