The logistics of Windows 95.

How many copies of Windows 95 will Microsoft sell? Right now, even Microsoft insiders admit they can only guess at the size and speed of the rollout. But it's probably a safe bet that sales will top at least 10 million units in the first six months. Add in the Microsoft Office upgrade that will follow close on the heels of Win95, and it's almost inevitable that the market will suffer logistical upheavals that will ripple throughout the industry.

In the past, similar logistical tremors--in manufacturing, distribution, and support--have occurred on a smaller scale just about every time Microsoft has shipped a major Windows or DOS upgrade. This time, Microsoft has lined up a network of outsourcing partners to do most of the heavy lifting, so the Win95 rollout should proceed a good deal more smoothly. Nevertheless, this is still The Big One, and there are certainly going to be bottlenecks and stress points that affect other software companies--especially those who plan to ship their own Win95 upgrades this fall.

Many of these logistical issues were explored during sessions at OpCon West two weeks ago, and there seems to be a consensus that three questions are the most critical:

Will there be a crisis in manufacturing capacity? The 1992 rollout of Windows 3.1 triggered a worldwide media shortage that lasted a good six months. Doug Taylor, who oversees Microsoft's U.S. manufacturing operations, says the company learned an important lesson from this experience and began stockpiling disks as far back as last September. As a result, he says, media shortages "probably won't be a problem for anyone." Moreover, Microsoft will encourage Win95 customers to buy CD-ROM versions, which may help reduce demand for magnetic media. Taylor also reports that Microsoft doesn't plan to go outside its current circle of suppliers for Windows 95 printing and assembly work, so other publishers shouldn't worry that Microsoft will monopolize everyone's manufacturing resources.

Nevertheless, there's a consensus that spot shortages (especially of paper) and manufacturing delays are likely to become much more common once Windows 95 goes into production.

Even if Microsoft by itself doesn't create manufacturing gridlock, there are at least a hundred Windows developers who have Win95 upgrades waiting in the wings; the instant Microsoft freezes the operating system code, most of these titles will go into production as rapidly as possible.

Can the channel absorb all the new titles? According to Computer Intelligence president Bob Brown, some of the worst logistical bottlenecks are likely to occur in the distribution channel. Resellers will jump on the Win95 bandwagon by showcasing as many Win95 titles as possible; to free up inventory dollars and shelf space for these new titles, most chains are likely to start sending back older Windows 3.1 and DOS SKUs the moment Win95 ships. Again, Microsoft says it will try to minimize the inventory squeeze by offering generous credit terms for its own Win95 titles. But there still will be intense competition for shelf space among other Win95 publishers. Brown also predicts that we may see an industry-wide cashflow problem if the major distributors finance higher inventory levels by stretching out their payables to publishers.

(One side effect of the Win95 shelf space wars, incidentally, is that a lot of marginal SKUs, even from major publishers, are likely to suffer permanent loss of retail shelf space. To reach buyers, developers of these titles probably will have to rely more heavily on direct mail, catalogs, electronic distribution, CD-ROM sampler disks, and other non-retail channels.)

Will there be another tech support brownout? Again, Microsoft has learned some important logistical lessons from the Windows 3.1 rollout. To avoid another tidal wave of tech support calls, Microsoft has already recruited five of the largest support outsourcers to answer questions from befuddled Win95 users. In addition, corporate help desk technicians are being trained in advance to solve common support problems, and an array of other programs--including on-line access to an improved Microsoft knowledgebase and support forum--are expected to reduce some of the support pressure. But the bottom line is that Windows 95 is still a brand-new operating system, which inevitably means a lot of installation, training, and compatibility problems. Microsoft expects to handle much of this support call volume, but millions of users are just as likely to call their applications vendors first--adding thousands of new calls to support organizations that are already barely keeping up with demand.