Who wins, loses with browser-less Windows 7

Microsoft's move to offer Windows 7 in Europe without a browser may help rivals, but it could make life more difficult for European consumers, particularly those who want to upgrade their existing machines.

As first reported earlier on Thursday by CNET News, Microsoft plans to ship Windows 7 to both PC makers and retail stores with Internet Explorer removed.

Now, most people will get Windows 7 on a new PC. Presumably, in that case, the computer maker will chose to add back Internet Explorer, include one or more rival browsers, or do both.

Indeed, that is what Microsoft itself is suggesting.

"Microsoft recommends that OEMs pre-install either IE8 or at least one other browser of their choice before distribution," Microsoft said in a memo to PC makers that was seen by CNET News. "If you do this, your end users in the European territory should be able to access the Internet without any additional steps or inconvenience."

The real hassle comes for those who want to upgrade their existing PC to Windows 7.

Moving from Windows Vista to Windows 7 can normally be done via an upgrade that preserves one's applications and data. However, because it removes the browser, moving to the "E" version of Windows 7 can only be done with a clean installation.

At that point, users have a system with no browser at all. So if they want Firefox or Opera or any other browser, they have no easy way to get it. For its part, Microsoft plans to make it as easy as possible for them to get IE. It will offer it via CD-ROMs at retail stores and via FTP, an old file downloading technique that has been largely sidelined due to modern browsers.

Forrester Research analyst J.P. Gownder said that the result is something that is very unfriendly to the very consumers that the EU is allegedly trying to protect. The European Union said in January that it had reached a preliminary finding that the inclusion of a browser within Windows violated its antitrust laws.

"It's a disaster caused by poor regulatory oversight," he said."It's definitely regulation gone wild and it's not going to help the consumer."

Matt Rosoff, an analyst with Directions on Microsoft, said the software maker probably made the move in an effort to avoid further regulatory action on the part of the European Union, which said in January that it believed the inclusion of a browser in Windows was a violation of European antitrust law.

"I guess Microsoft has taken the preemptive move to avoid a big fine," he said. "The EU didn't ask them to do this. They are still fighting the statement of objections."

So who benefits? Well, PC makers stand to gain, because they now have a more valuable piece of real estate to sell. In the past, they could offer deals to include rival browsers as the default on a new PC, but they were still shipping a PC with Internet Explorer. Presumably now, a browser maker could strike a deal to be the only browser on a machine.

"It certainly gives them a new placement to sell," Rosoff said. "Previously, with IE included, there wasn't as much incentive for browser makers to strike these kind of deals."

Of course, striking an exclusive deal would probably take a lot of cash. So it would seem Google, and not Opera (which brought the EU complaint), is in the best position to take advantage of the new landscape.

Gownder said he expects most new machines sold in Europe will still come with Internet Explorer, though some smaller PC makers might opt to exclude Microsoft's browser.

"It could be that there are some deals cut," Gownder said. "I would think the more typical case is that they ship with IE or IE plus one other."

As for Microsoft, Rosoff said that the company plans to offer an "Internet Pack" disc that includes not only IE, but also its Windows Live programs such as Windows Live Mail and Windows Live Messenger.

Editors' note: Matt Rosoff is a member of the CNET Blog Network.