Smart Microsoft bucks Windows ruling

By Anna McLauchlin

Date: 23/06/05

Microsoft appears to be emerging unscathed from its long-fought anti-trust battle with the European Commission over the marketing of its Media Player.

Although, as a result of the case, retailers and computer manufacturers can market Windows without its Media Player (Windows XP N), many say that they are not interested in the stripped-down version.

"We are not planning to stock Windows XP N because it is the same price as the full version," a spokeswoman for specialist computer retailer PCWorld UK said: "We want to offer the best value for our customers."

Four major computer manufacturers have also said that they will not install Windows XP N in their PCs.

A spokeswoman for Lenovo, which recently took over IBM's PC unit, said that Lenovo's PCs would all carry the full Windows version. "At the moment we're shipping a consistent product line worldwide," she said.

The company would monitor customer interest but Lenovo would only ship PCs with an unbundled player if there were a market for it, she said, adding: "Our customers in Europe aren't generally demanding a Media Player-free version of Windows on our PCs."

A spokeswoman for Dell echoed this view. "As most of the users of Microsoft Windows also want the Media Player it's the best offer and one that we will continue to make to consumers," she said, adding that "if consumer demand changes we will act accordingly".

A Fujitsu Siemens spokeswoman said that as the software was already free to download there was "no reason for not including Media Player". Hewlett-Packard has made similar comments in recent weeks.

Under the March 2004 decision by the Commission, Microsoft was forced to roll out a version of its Windows software minus the Media Player, after competitors such as RealNetworks and QuickPlayer complained about the computer giant's monopoly on media player software.

Windows XP N has been available to computer makers since 15 June and retailers will be able to stock it from 1 July.

One of the main problems with the decision is that the Commission did not address the cost of Microsoft's software, stating only that the full version could not be offered more cheaply than the stripped-down version. Microsoft put them at the same price.

Thomas Vinje, a lawyer for the European Committee for Interoperable Systems, a group of five technology firms supporting the Commission's case, argues that consumer demand is irrelevant.

"If there were a price differential then I believe we would see PC manufacturers choosing between competitors," he said. "These manufacturers would prefer to see competition as it promotes innovation in the sector, but they have to act in light of the current pricing situation given the competition at PC manufacturer level." Vinje said that it was possible for the Commission to force Microsoft to make Windows XP N cheaper than the full version.

But to do so, the EU executive would have to make a new inquiry and decision, which might be pointless anyway if Microsoft's competitors had already been frozen out of the market.

A Commission spokesman said that "there is no provision in the March 2004 decision to impose a price differential".

A spokesman for Microsoft said that the company had complied with the Commission's demands. "Whether computer manufacturers and retailers offer this product in Europe is their decision," he said.

RealNetworks declined to comment on the issue.

The Commission is hoping for a better result on European competition with its demands on interoperability following complaints from server provider Novell and free software operators.

Microsoft recently agreed to disclose information that would allow non-Microsoft work group servers to be fully interoperable with Windows.

It also agreed to allow the development and sale of interoperable products worldwide and to disclose some of it free of charge.

The Commission is currently 'market-testing' Microsoft's proposals and will release its judgement shortly.

But any real benefits for Microsoft's competitors may not be seen for a while, as the computer giant will not accept other software manufacturers sharing source codes they have developed using Microsoft protocols with others via a licence.

As the Commission cannot oppose this for fear of triggering another court appeal, it will have to wait until the Court of First Instance rules on Microsoft's appeal against the March 2004 decision.

Following the European Commission antitrust ruling against Microsoft in March 2004, the company is ready to market Windows without Media Player. However, many retailers and computer manufacturers say they are not interested in the stripped-down version of Windows, which is being offered at the same price as Windows in its full version.