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After Ruling, Microsoft Eases Windows OEM Restrictions

In a sign that the ice may be thawing between Microsoft Corp. and the U.S. Department of Justice, the Redmond, Wash., software giant on Wednesday said that as a result the recent ruling by the U.S. Court of Appeals for the District of Columbia, it will offer computer manufacturers more flexibility in how they configure desktop versions of the Windows operating system.

"We recognize that some provisions in our existing Windows licenses have been ruled improper by the court, so we are providing computer manufacturers with greater flexibility and we are doing this immediately so that computer manufacturers can take advantage of them in planning for the upcoming release of Windows XP," said Steve Ballmer, chief executive officer of Microsoft.

The announcement was the best indication yet that a settlement between Microsoft and DOJ may be within reach; however, Ballmer added the caveat: "This announcement does not take the place of settlement discussions with the government parties or any future steps in the legal process,"

"...we wanted to take immediate steps in light of the court's ruling. We are hopeful that we can work with the government parties on the issues that remain after the court's ruling."

But while Microsoft's decision to alter its policies may indicate that the company is now ready to deal with the government, Yankee Group analyst Neal Goldman said he's not so sure it's that cut and dried.

"I think it is a strategy on two fronts," Goldman said. "It's a strategy to be appearing less dogmatic to two constituencies. On the one hand is the consumer base which they have been alienating -- and I think that's their real problem -- and the other is to appear more willing to move as they head into settlement hearings. But the question is what are they willing to give up to make it go away. There's no question that they want to settle. This is an albatross hanging around their necks."

He added, "This is clearly a marketing move geared at initiating settlement and making consumers believe that they're not necessarily a bad company."

While Goldman noted that the consumers Microsoft is trying to reach will not necessarily understand what Microsoft is giving up through its new policy ("They're not giving up a ton," he said), he also noted that the feeling of the decision is more important than the details.

"The over-arching 'feel-goodness' message of it is what they hope will come across," he said.

The software titan said its new policy will give PC manufacturers the option to:

  • Remove the Start menu entries and icons that provide end users with access to the Internet Explorer components of the operating system; the company said it will include Internet Explorer in the Add/Remove programs feature in Windows XP;
  • Remove the Start menu entries and icons that provide end users with access to Internet Explorer from previous versions of Windows, including Windows 98, Windows 2000 and Windows Me;
  • Put icons directly onto the Windows desktop.

Additionally, the company said consumers will now be able to use the Add/Remove Programs feature in Windows XP to remove end-user access to the Internet Explorer components of the operating system.

Microsoft said it will have to conduct development work and testing on Windows XP before the additional flexibility will be available, but said it is confident it can complete the work in time to meet the date for the OS' worldwide launch on Oct. 25.



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