WINDOWS 98: JUST HOW MUCH DOES IT COST?

As if its legal problems with the Justice Dept. aren't complicated enough, try figuring out Microsoft Corp.'s pricing strategy on its new Windows 98 operating software, expected out on June 25. Four personal-computer makers, with worldwide market share of 16%, say Microsoft has raised the base price for the controversial program, while three PC rivals, representing 9.4% of sales, say they'll pay exactly the same as they do for Windows 95.

Who cares? Regulators certainly might. After all, Microsoft consistently portrays itself as a pro-consumer company that has constantly offered powerful new technology at the same price or lower -- not a predatory monopoly. And PC makers that were hit with the hike -- two companies claim an increase of roughly $7 from Win95, to around $60 per copy -- are fuming. They point out that unlike its predecessor, Win98 lacks the hot new features to set off a big buying binge. And with profits tumbling because of plunging PC prices in the last year, they had hoped Microsoft would start sharing the pain -- and help PC makers lower prices to spur demand. "Do they want to make more PC customers, or just take more profits out of everyone else's pockets?" asks one PC executive.

Overall, are prices really rising? Microsoft offers various volume discounts and rebates of $20 or more to PC makers that help it hit its goals. For example, PC makers get reimbursed $1 to $3 for every Windows sticker or logo that appears on their products and a few bucks for including Win98-compatible TV-tuner cards in new models, say PC makers.

As for Microsoft, it insists that it hasn't raised prices. On the eve of the Justice's antitrust suit, Microsoft CEO Bill Gates told Business Week: "Windows 98 is a product that we priced exactly the same as Windows 95." And, while the retail price will be the same, Microsoft doesn't publish a price list for PC makers, so it's hard to detect changes. For this reason, it's doubtful that any PC maker will go public with gripes. Says one: "No one wants to testify in front of a Senate panel for fear that Microsoft would turn around and raise your price."

By Peter Burrows in San Mateo, Calif.