March 24, 2004 10:00 AM PST

Cropped Windows already exists

One Windows, indivisible, with browser and Media Player for all.

But Microsoft may have damaged its own arguments to the European Union to accept its standard platform pledge in the wake of recent programs to offer stripped-down versions of its software in some Asian countries.

Faced with a program by the government of Thailand to provide citizens with low-cost PCs running open-source source software, Microsoft responded with a special $40 package with scaled-back versions of Windows XP and Office. A similar deal was recently extended to Malaysia.

European regulators ruled Wednesday that Microsoft, within 90 days, must offer PC manufacturers a version of its Windows operating system without Windows Media player. The decision does not conclude that European consumers must be offered PCs and operating system software without media players, as the governing body said most consumers purchase PCs from hardware vendors that already feature a bundle of an operating system and a media player.

It remains unclear if the software maker's Asia strategy had any influence on that decision. Microsoft has said it will appeal the ruling.

Microsoft executives have said the deals reflect new flexibility in product packaging overseas. "What we used Thailand as a pilot to look at is: 'Can we separate product sets to meet the needs of citizens in a developing environment?'" said Maggie Wilderotter, a senior vice president of business strategy for Microsoft. "How can we put good-better-best product sets into the market based on local needs?"

Microsoft executives have said the "entry level" version of Windows XP is intended for developing nations but haven't indicated in what other countries the program might be expanded. The Redmond, Wash.-based company has given no indication of similar deals on server software or other enterprise products.

Analysts, however, have said the deals set potentially damaging precedents for Microsoft, amid growing pressure from governments worldwide. Research firm Gartner, for one, predicts that the program will lead to the rapid erosion of Microsoft's one-size-fits-all pricing model. "Once they find a country that speaks English that wants this kind of deal, it's going to be a lot tougher for them" to stick to current pricing models, said Mike Silver, a Gartner analyst.

Equally important, the deals set a precedent for chopping up major Microsoft applications to suit local needs.

"I think it's inevitable (that) people will point to what's been done already as evidence that you can deliver a somewhat streamlined version of the product," said Stephen O'Grady, an analyst at research firm Red Monk. "Absolutely, there's something to the argument that what's being delivered in Malaysia is sort of a fork...to having two versions of Windows."

But O'Grady added that the precise impact of the European Union ruling hinges more specifically on the Windows configuration the body said European consumers ought to have. The Asian configurations mainly leave out technical tools unlikely to be used by PC novices, while the EU focused primarily on the widely used and consumer-friendly Windows Media Player.

One expert believes that there is a significant difference between the scaled-back version of Windows that Microsoft created for Thailand and Malaysia and the "opened up" example of the operating system required by the EU ruling. Jaap Favier, an Amsterdam, Netherlands-based analyst for Forrester Research, said it is unlikely that there was a link between the Asia package and the European judgment.

"It's not a problem for Microsoft to take things out (of Windows) as it did in Asia," Favier said. "The problem is in opening the software to other (vendors) to fill the gaps. I see this as two different debates."

Favier pointed out that, if forced to follow through with the EU's conditions, Microsoft could likely meet those terms quickly. However, he said that doing so would almost immediately create major headaches for the software maker, because it would be forced to deal with a raft of new issues related to the applications created to work with Windows by other vendors.

O'Grady said before the ruling: "It will depend very heavily on what the EU determines needs to be in (Windows). If they require a separate piece that looks like what Microsoft is already delivering elsewhere, it would be hard for Microsoft to argue they can't do that. If the EU goes beyond that, Microsoft can say they've gone as far as they can go."

Foreign governments also have played a significant role in forcing Microsoft to provide access to the source code that underlies Windows and other applications. The resulting "shared source" program could have helped set a precedent for granting the EU's demands for more access to the application programming interfaces behind Windows. But Favier also dismissed this contention, calling the creation of the shared source program a "commercial reality" while pointing to the EU ruling as more of a legal issue.

CNET News.com's Matt Hines contributed to this report.

 

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