Microsoft to Delay Release of Windows 98

In news that sent its stock plunging more than 5%, Microsoft Corp. on Monday said it will delay the release of Windows 98 until the second quarter of 1998.

Microsoft said the company needs more time to combine two versions of the software into a single product, for computers running Windows 95 and those running the older Windows 3.1.

Microsoft stock, which was off about $2 ahead of the announcement after an analyst spoke of a delay, fell $7.25 to $130.69 on the Nasdaq Stock Market.

By releasing upgrades for both Windows 95 and 3.1 at the same time, Redmond, Wash.-based Microsoft says retailers won’t have to stock two separate products.

Windows 98, like Windows 95, is being designed to run programs written for earlier versions of the operating software, which runs the basic functions of a computer.

Phil Holden, Windows product manager, said software testers and customers were confused by the prospect of buying two products.

“The net result is it will take longer to do testing,” Holden said.

The new version of Windows won’t be the technological leap that marked the introduction of Windows 95 two years ago. But it will integrate Microsoft’s Internet Explorer browser into the general operation of the computer, while being more reliable and simpler to operate.

That means a user will not have to pull out of one application and then call up the Web browser to get onto the Internet.

That could mean trouble for Microsoft rival Netscape Communications Corp., maker of the popular Navigator browser, which now has about 70% of the browser market vs. Microsoft’s 30%.

Microsoft estimates about 60 million computer users still rely on Windows 3.1, while 100 million use Windows 95 or Windows NT, a corporate version of the software.

Windows 95 was released in August 1995 after more than a year of delays.