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XP Launched Into Tough Sales Environment

10/25/2001 02:35:00 PM Eastern

New York - A veritable Who's Who of computer industry leaders, New York politicians and celebrities helped Microsoft's Bill Gates launch the Windows XP operating system here this morning.

The kick off of Microsoft's $200 million worldwide marketing and advertising campaign geared to convince consumers and businesses to upgrade to this heavily revamped version of Windows was part glitz and glamour, with Regis Philbin receiving a lesson in XP's capabilities, and part dead serious debate on whether the operating system might bail the industry out of its sales doldrums. New York State Gov. George Pataki and New York City Mayor Rudy Guiliani were on hand to thank Microsoft for hosting the launch here.

The event's focus was that XP will deliver a better multimedia experience for the user and enable the PC to become the center of a home entertainment system. Equally as important is the fact that XP is not based on the same code as previous versions of Windows, which were which highly unstable, causing computers to crash.

'Microsoft said a decade ago that the Windows 95 code was not rich enough for where we wanted to go so we built Windows NT. But that was always for the high-end, but with Windows XP we can get all versions of Windows on one code base,' Gates said.

About 100,000 pre-orders for the consumer upgrade version of XP have been taken at $99 each, double the number posted by Windows 95, and almost 30 million XP-ready PCs have been shipped since June. Another 5 million computers with XP are now on retailer's shelves, Gates said. Windows XP Professional has a $199 street price.

The fact that eight of the industry top players were on hand for the launch indicated how important XP has become to the PC industry. Joining Gates was Carly Fiorina, Hewlett-Packard's CEO, Michael Dell, CEO of Dell Computers, Ted Waitt, CEO of Gateway, Craig Barrett, Intel's CEO, Michael Cappellas, CEO of Compaq Computers, and executives from Sony, Toshiba and Staples.

There was no general consensus reached this panel of high-tech CEOs, which met prior to the official launch ceremony, on what might be XP's immediate impact on the market. But all agreed that the operating system will have an effect.

Dell was the most optimistic. With Dell the only major computer maker to increase its shipments and share in the third quarter, he expected to post further gains in the fourth quarter with XP contributing customers along with the usual boost gained from holiday shoppers.

Waitt expressed a polar opposite opinion.

'We are not forecasting a huge uplift due to Windows XP because of the times we are in,' he said, adding that XP-generated sales will take place further down the road.

Fiorina expected XP to help peripheral product sales, but have little impact on PCs. XP's built in music, digital imaging and video editing ability should help those product areas. Cappellas, who saw Compaq ship almost 50 percent fewer PCs in the third quarter compared to the same period last year, said there is a lot of pent up demand for PCs, but vendors need to give people a more compelling reason to go out and make a purchase.