It's Tough Being Microsoft

I had intended to discuss your responses to last week's look at the Steve Gibson/Windows XP security controversy, but the overwhelming amount of mail I received about the topic will require another week to sift through. Thanks to everyone who wrote—most of you are far more educated than I am about the details behind this intriguing situation. I'll write more about that topic next week.

In the meantime, I'll look more closely at a subject that's been an underlying theme of several UPDATE columns this year: the Microsoft antitrust case. As you know, the US District Court of Appeals took on the case and issued a ruling a few weeks ago (see my article "Analysis of the Appellate Court Opinion on Microsoft's Antitrust Case," linked below). Since the ruling, Microsoft has openly admitted that it wants to settle the case and has taken steps to show that it's serious about doing so. Let's look at what the company has done and examine the ways in which users and the press repeatedly misunderstand its actions.

Easing Windows XP licensing
Last Wednesday, Microsoft unexpectedly announced changes to the way it licenses Windows to PC makers—changes that would have kept the company out of court had it adopted the policies 2 years ago. Starting with Windows XP's release in October, end users and PC makers will be able to remove Internet Explorer (IE) from Windows using the Add and Remove Programs applet; the core IE files will remain on the system, but the end-user application will be gone. Applications that require IE to run will run just fine, but PC makers (and users) can easily replace IE with the browser of their choice. Thanks to this decision, Dell or any other PC maker can strike a deal with, say, AOL, and have AOL appear as the default Internet client on the new Start Menu. In fact, a user buying a new PC might never even know IE exists: The application simply won't appear anywhere in the system.

Pundits were quick to claim that this move was too little, too late. Coming at a time when IE's one-time competitor, Netscape, is picking at only scraps of market share, the concession does nothing to weaken Microsoft's position in the market. Although most PC makers probably won't exclude IE, the concession is still important. Microsoft has always argued that removing IE would make Windows inoperable. The company even briefly supplied a crippled version of Windows 95 without IE that wouldn't even boot, to prove the point. Giving people the option to remove IE satisfies the court's—and end users'—requests that this application be optional. It's an important step for a company that has too often been stubborn about technical matters.

New Mexico Settles with Microsoft
The licensing concession was so important that New Mexico promptly settled its antitrust case against Microsoft and left the alliance of states that's suing Microsoft. However, the DOJ and other states remained unconvinced that Microsoft is a changed company. Late Friday, the group asked the courts to expedite the upcoming hearings, in part so that the courts could consider the soon-to-be-released Windows XP OS. Many believe the government might ask the court to delay XP's release so that the government can examine the new OS and the various technologies that Microsoft has integrated into it.

Microsoft Announces Windows XP Add-On Packs
Microsoft will include CD burning (creation) and ripping (audio copying) functionality in XP but will let users rip audio CDs only in Microsoft's Windows Media Audio (WMA) format. However, the company is building a plug-in technology into Media Player for Windows XP (MPXP) so that PC makers can add MP3 ripping functionality if they want; Microsoft says that adding that technology directly to XP would have increased the OS's licensing cost. (For details, see my article, "The Truth Behind Those XP Conspiracies" linked below.)

A related problem concerns DVD playback. MPXP purportedly can play DVD movies but can do so only after the user installs the proper DVD codec software; this software doesn't come with XP. Again, Microsoft said that the cost of licensing DVD codecs was prohibitive. In addition, most people who acquire Windows do so with a new PC; any PC that ships with a DVD drive will include the codec.

Neither of these excuses was good enough, however, for most users. Bowing to pressure from customers and the press, Microsoft will release the MP3 Creation Pack and the DVD Decoder Pack, which will enable MP3 ripping and DVD movie playback, respectively. Each pack will be available in three versions, using technology from InterVideo, CyberLink, and Ravisent. Microsoft used this approach to ensure competition and to underline the fact that this technology isn't freely available. Therefore, the plug-ins aren't free.

The feedback from this announcement is predictably negative: Users and early press articles say Microsoft should make this technology available for free.

No matter what Microsoft does, the company will never come out ahead. In the wild and wooly World Wide Web—where everyone with a keyboard has a say—Microsoft's staunchest critics can bombard the company from on high. But I think the reality will become apparent in retail stores later this year when real people vote with their dollars. And regardless of all the crazy things you'll read about Microsoft—from conspiracy theories to world domination—I think people will discover that XP is exactly what they've been waiting for.

Analysis of the Appellate Court Opinion on Microsoft's Antitrust Case

The Truth Behind Those XP Conspiracies

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