OutHouse
Lifer
Microsoft to Allow PC Makers to Alter Windows
By Scott Hillis
SEATTLE (Reuters) - Microsoft Corp. on Wednesday said it will change how it licenses its Windows operating system to computer makers, letting them remove access to its Web browser and make other alterations.
The move was in response to a ruling last month by a U.S. appeals court that said some of Microsoft's licensing practices were illegal.
The most significant change will let PC makers remove icons for the Internet Explorer Web browser -- the product that is at the heart of the U.S. government's antitrust case.
Microsoft had bundled the browser into Windows and forbade PC makers from removing the program as it battled with rival browser maker Netscape.
Internet Explorer would also be included in a utility that would let users disable the program on their own, Microsoft said.
PC makers can also add icons for other programs, such as RealNetworks Inc.'s popular RealPlayer or AOL Time Warner Inc.'s AOL Internet access service, to the initial screen, or ''desktop,'' of Windows.
That marks a rollback on the design for the next version of the software, Windows XP (news - web sites), which was originally meant to be nearly free of icons.
``We recognize that some provisions in our existing Windows licenses have been ruled improper by the court, so we are providing computer manufacturers with great flexibility,'' Chief Executive Steve Ballmer said in a statement.
The changes would require some testing but would not delay the rollout of Windows XP, scheduled for an Oct. 25 launch, Microsoft said.
Shares in Microsoft finished up $2.02, or 3.1 percent, to $66.50 on the Nasdaq.
RISK-FREE MOVE
Analysts said the move, intended to show the courts that Microsoft is acting in good faith, will have little impact on the market since Microsoft has already won the browser war.
``It shows Microsoft is being somewhat politically smart by making this move voluntarily, if you will, before being forced to do it,'' said Dwight Davis, an analyst with Summit Strategies.
``Microsoft can make these concessions without much pain on its part,'' Davis said.
A Microsoft spokesman said the option to eliminate icons would apply only to the browser, since that was the product addressed by the court.
That leaves untouched several other products and services bundled into Windows -- such as the Windows Media Player, MSN Internet access, and Windows Messenger.
``Essentially what Microsoft is doing is acknowledging that the battle has moved on from the browser to media and Web services,'' said Chris Le Tocq, an analyst with Guernsey Research.
``It's a clear indication that time is on Microsoft's side,'' Le Tocq said.
TRYING TO SETTLE
Although the U.S. Court of Appeals in Washington D.C. last month spared Microsoft a break-up, it also upheld a lower court's finding that the company was a monopoly and that some of its licensing practices were illegal.
Other parts of the case, such as whether Microsoft's practice of tying the browser and other software to Windows was illegal, are to be sent back to a different lower court judge for consideration.
Microsoft executives from co-founder and Chairman Bill Gates (news - web sites) on down have repeated their willingness to settle the case, which has dogged the company for four years and cast a cloud over its plans for a new generation of Web-based services tied to Windows.
``This announcement does not take the place of settlement discussions with the government parties or any future steps in the legal process; however, we wanted to take immediate steps in light of the court's ruling,'' Ballmer said.
``We are hopeful that we can work with the government parties on the issues that remain after the court's ruling,'' Ballmer added.
Justice Department (news - web sites) officials declined to comment on the Microsoft concessions.
CRITICS STILL CRITICAL
Microsoft's most strident critics were unimpressed, saying the licensing concessions would do little to ensure future competition in the software business.
``The browser war is over, they've won the browser war,'' said Iowa Attorney General Tom Miller, one of the 19 states attorneys general suing Microsoft. ``So to do now what they should have done before -- that is not very significant.''
The concessions likely were designed to appease whichever new U.S. District Court judge is appointed to take over the case later this summer, antitrust experts said.
``You want to say to the judge, 'We're good citizens. We immediately attempted to change our conduct to comply with the court's order,'' said one attorney familiar with the case.
The changes also don't address the more important question of how flexible Microsoft will be with other aspects of Windows XP, other analysts said.
``I think the question remains really with regard to other applications, how much choice they're going to give consumers and how level the playing field will be for companies that have applications that compete with Microsoft's,'' said Steve Houck, an antitrust attorney who worked on the case under New York Attorney General Eliot Spitzer before leaving for private practice.
By Scott Hillis
SEATTLE (Reuters) - Microsoft Corp. on Wednesday said it will change how it licenses its Windows operating system to computer makers, letting them remove access to its Web browser and make other alterations.
The move was in response to a ruling last month by a U.S. appeals court that said some of Microsoft's licensing practices were illegal.
The most significant change will let PC makers remove icons for the Internet Explorer Web browser -- the product that is at the heart of the U.S. government's antitrust case.
Microsoft had bundled the browser into Windows and forbade PC makers from removing the program as it battled with rival browser maker Netscape.
Internet Explorer would also be included in a utility that would let users disable the program on their own, Microsoft said.
PC makers can also add icons for other programs, such as RealNetworks Inc.'s popular RealPlayer or AOL Time Warner Inc.'s AOL Internet access service, to the initial screen, or ''desktop,'' of Windows.
That marks a rollback on the design for the next version of the software, Windows XP (news - web sites), which was originally meant to be nearly free of icons.
``We recognize that some provisions in our existing Windows licenses have been ruled improper by the court, so we are providing computer manufacturers with great flexibility,'' Chief Executive Steve Ballmer said in a statement.
The changes would require some testing but would not delay the rollout of Windows XP, scheduled for an Oct. 25 launch, Microsoft said.
Shares in Microsoft finished up $2.02, or 3.1 percent, to $66.50 on the Nasdaq.
RISK-FREE MOVE
Analysts said the move, intended to show the courts that Microsoft is acting in good faith, will have little impact on the market since Microsoft has already won the browser war.
``It shows Microsoft is being somewhat politically smart by making this move voluntarily, if you will, before being forced to do it,'' said Dwight Davis, an analyst with Summit Strategies.
``Microsoft can make these concessions without much pain on its part,'' Davis said.
A Microsoft spokesman said the option to eliminate icons would apply only to the browser, since that was the product addressed by the court.
That leaves untouched several other products and services bundled into Windows -- such as the Windows Media Player, MSN Internet access, and Windows Messenger.
``Essentially what Microsoft is doing is acknowledging that the battle has moved on from the browser to media and Web services,'' said Chris Le Tocq, an analyst with Guernsey Research.
``It's a clear indication that time is on Microsoft's side,'' Le Tocq said.
TRYING TO SETTLE
Although the U.S. Court of Appeals in Washington D.C. last month spared Microsoft a break-up, it also upheld a lower court's finding that the company was a monopoly and that some of its licensing practices were illegal.
Other parts of the case, such as whether Microsoft's practice of tying the browser and other software to Windows was illegal, are to be sent back to a different lower court judge for consideration.
Microsoft executives from co-founder and Chairman Bill Gates (news - web sites) on down have repeated their willingness to settle the case, which has dogged the company for four years and cast a cloud over its plans for a new generation of Web-based services tied to Windows.
``This announcement does not take the place of settlement discussions with the government parties or any future steps in the legal process; however, we wanted to take immediate steps in light of the court's ruling,'' Ballmer said.
``We are hopeful that we can work with the government parties on the issues that remain after the court's ruling,'' Ballmer added.
Justice Department (news - web sites) officials declined to comment on the Microsoft concessions.
CRITICS STILL CRITICAL
Microsoft's most strident critics were unimpressed, saying the licensing concessions would do little to ensure future competition in the software business.
``The browser war is over, they've won the browser war,'' said Iowa Attorney General Tom Miller, one of the 19 states attorneys general suing Microsoft. ``So to do now what they should have done before -- that is not very significant.''
The concessions likely were designed to appease whichever new U.S. District Court judge is appointed to take over the case later this summer, antitrust experts said.
``You want to say to the judge, 'We're good citizens. We immediately attempted to change our conduct to comply with the court's order,'' said one attorney familiar with the case.
The changes also don't address the more important question of how flexible Microsoft will be with other aspects of Windows XP, other analysts said.
``I think the question remains really with regard to other applications, how much choice they're going to give consumers and how level the playing field will be for companies that have applications that compete with Microsoft's,'' said Steve Houck, an antitrust attorney who worked on the case under New York Attorney General Eliot Spitzer before leaving for private practice.
