Microsoft to Ship Modified Windows XP

James Niccolai, IDG News Service
Wed Jun 8,12:00 PM ET


Microsoft will begin distributing a modified version of its Windows XP operating system to PC makers in Europe on June 15, more than a year after it was ordered to do so as part of the European Commission's antitrust ruling against the company.

Microsoft was ordered last March to sell a version of Windows XP without its media player software, as part of the Commission's ruling that the software maker abused its "near-monopoly" in Europe to harm competition. By effectively forcing PC makers to include Windows Media Player with every computer they sold, Microsoft gained an unfair advantage over rivals such as RealNetworks and Apple Computer, the Commission said. The Commission is the E.U.'s executive body.

The new software, called Windows XP Home Edition N and Windows XP Professional Edition N, is Microsoft's second attempt to meet the Commission's requirement. It distributed a version of XP to channel partners in January, but the Commission rejected that product as unsatisfactory.

In particular, Microsoft altered registry files in a way that made the operating system work less well with rival media players, the Commission said at the time. It also rejected Microsoft's proposed name for the product, Windows XP Reduced Media Edition, which it found unappealing. The Commission told Microsoft to remove warnings that the new software would not work with some programs.

The latest versions fix those problems, Microsoft says in a statement Wednesday. They will be available to PC makers on June 15 in English, French, German, Italian, and Spanish, and to other distribution channels, including retail stores, on July 1. Versions in 10 other European languages will be in the channel by July 15, it says.

Cost Concerns

Microsoft has said the software will cost the same as the "standard" version of Windows XP, which Microsoft will continue to sell. Critics have argued that it should charge less for the versions without Windows Media Player, on the grounds that consumers will not pay the same price for less software, undermining the ruling.

As with existing versions of Windows, PC makers and end users can install other media players with the new editions, Microsoft says. It provided CDs of the software to the European Commission early last week, it says.

How much impact the new software will have remains unclear. Most big PC makers in Europe said in January that they did not plan to offer the version of Windows without media player, citing the cost of supporting additional products and the weak demand they anticipated from consumers.

A Microsoft spokesman in Europe did not immediately return a call seeking comment Wednesday.

In the ruling last March, the Redmond, Washington, company was also fined $662 million and ordered to provide interfaces for its workgroup server software to competitors. The company has been haggling with regulators over the terms of its compliance ever since, and the Commission has threatened to fine Microsoft $5 million a day for noncompliance.

The two sides appear to be inching closer to an accord, however. A week ago, Microsoft submitted a new proposal for compliance that included more flexible terms for its server licensing program. The Commission said it will consult competitors to decide if the efforts are acceptable.

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