Beyond Binary

Microsoft has halted distribution of its Windows 7 USB/DVD Download tool after questions were raised as to whether the software utility makes improper use of open-source code. The tool is designed to help owners of Windows XP-based Netbooks get Windows 7 onto their machines.

(Credit: Microsoft)

Microsoft has halted distribution of a tool aimed at making it easier to put Windows 7 on Netbooks amid allegations that the utility makes improper use of open-source code.

The software maker said on Tuesday that it has pulled down the Windows USB/DVD Tool while it investigates the issue, which was raised last week by Windows blogger Rafael Rivera on his Within Windows blog.

In his blog post, Rivera said Microsoft appears to use code from a tool called ImageMaster that is licensed under the GPLv2 open-source license. The General Public License, like other open-source licenses, allows code to be freely used by others, but has its own set of terms and conditions, such as sharing any modifications made to the code.

Microsoft confirmed it has launched a review of the matter and taken the utility off its online Microsoft Store until that inquiry has been completed.

"Microsoft is looking into this issue and is taking down the (Windows 7 updating) tool from the Microsoft Store site until its review is complete," the company said in a statement. "We apologize to our customers for any inconvenience."

Though somewhat arcane, the utility is important because it solves a technical challenge in upgrading the operating system on Netbooks and other PCs without an optical drive.

Microsoft had been exploring for months different ways of trying to help users of Windows XP-based Netbooks move to Windows 7. The tool, which was released last month alongside Windows 7, allows users to take a downloadable copy of the operating system and create a bootable drive.

The issue is also a thorn in Microsoft's efforts to show that it can play nice with the open-source community. As ZDNet blogger Mary Jo Foley notes, this isn't the first time Microsoft has been accused of misusing GPL code.

The latest dust-up comes as Microsoft is celebrating the third anniversary of its deal with Novell, one of Microsoft's biggest--and most controversial--efforts to blend its world with the open-source world.

Under that deal, Microsoft agreed not to sue Novell customers for their use of its Linux distributions.

Microsoft has also released a number of products under various open-source licenses itself, though typically not under the GPL, which it sees as one of the more restrictive licenses. Redmond has been particularly critical of terms in version 3 of the GPL.

The software maker did release a few Linux drivers under GPLv2, although it appears its hand may have been forced there. Some have suggested the drivers contained GPL code, meaning that they would have necessarily needed to be released back under the GPL.

Microsoft has taken a number of different approaches to open-source software, particularly Linux. The software maker has at times accepted the notion of a heterogeneous world where Linux and Windows co-exist, pledging to do better to make sure IT administrators can manage mixed environments.

At other times, Microsoft executives have lashed out, painting open-source software as violating hundreds of Microsoft patents. In its lawsuit against TomTom earlier this year, Microsoft for the first time made those accusations in court, alleging that TomTom's implementation of Linux in its GPS systems infringed on Microsoft patents. The two companies quickly settled the matter, although terms were not disclosed.

After months of grappling with the issue of how to allow Windows XP Netbook owners to move to Windows 7, Microsoft is ready with its answer.

Starting on Thursday, Microsoft is adding a tool to its online store that will allow those who buy Windows 7 to create a bootable USB drive with the operating system that can then be used to upgrade a Netbook.

"There are lots of XP Netbooks out there," Microsoft's Chris Flores said in an interview. "We wanted to make it as easy as possible for the enthusiasts that want to do this."

Microsoft plans to make available on Thursday a tool that will walk users through the process of moving a downloaded copy of Windows 7 onto a USB drive, be that a memory stick or portable hard drive.

The challenge is that Netbook owners must still tweak their computer's BIOS (Basic Input Output System) to look for a USB drive before booting off the PC's hard drive.

"We're still not recommending this for the average person," Flores said. A rule of thumb is that if a user doesn't understand what is meant by tweaking the BIOS, they probably shouldn't do it.

Consumers should also make sure their USB drive has at least 4GB of free space and check Microsoft's compatibility center and run an upgrade adviser to make sure both their hardware and software will work with Windows 7.

Going from Windows Vista to Windows 7 is relatively straightforward. So one might think that moving from a pre-release version of Windows 7 to the final version would also be simple.

One would be wrong.

That's because the upgrade versions of the Windows operating system (the cheapest way to move to the final version) check for a previous, non-test version of Windows on the drive. That means, if a user did a clean installation of Windows 7 on their test system (as recommended by Microsoft), that same user will have to back up their data, reinstall their original operating system (XP or Vista), then install Windows 7, restore their data, and then reinstall their applications.

For testers who were running XP, that means doing a clean installation of Windows XP over their Windows 7 test build and then a clean installation of Windows 7 over that. Vista users have the option of reinstalling that operating system and then doing an in-place upgrade or a clean installation of Windows 7.

Testers looking to move from a test version of Windows 7 to the final product may find the move not only costly, but time consuming.

(Credit: Microsoft)

Microsoft says that, for what it's worth, that's roughly the same thing that was required for those moving from pre-release versions of Windows Vista to the final release.

Even so, it's an unfortunate burden for those who have provided lots of feedback and indeed been some of the operating system's biggest champions. Users were also pushed to do a fresh installation when moving from Windows 7 beta to the latest test version, although some users found ways around having to do this.

It's just one of several scenarios in which users may find getting to Windows 7 to be a tricky proposition. In general, most people get Windows through buying a new PC. But there are still plenty of folks who decide to update their existing machines.

That's proving to be tricky, not just for testers, but also for people who want to upgrade their Netbooks. That's because such machines, by their nature, don't come with a DVD drive. However, a source says Microsoft is considering offering Windows 7 via flash drive--a move that could make that upgrade easier.

Microsoft is also trying to lower the other barrier to those moving from a test version to the final Windows 7--the cost. The software maker has a limited promotion--through July 11 in the U.S.--that lets people buy an upgrade copy of Windows 7 for as low as $49.

As for those who haven't been testing Windows 7, Microsoft notes that the upgrade version of Windows 7 just looks for a copy of Windows XP or Vista, so users don't need to find their original system discs. It should be able to tell by looking at the hard drive.

Users can also use the upgrade as a chance to move to a higher-end or lower-end version of Windows. To move from Windows Vista Home Basic, for example, to Windows 7 Home Premium, a user need buy only the upgrade version of Windows 7. Likewise, one could move from Windows XP Home to Windows 7 Professional just by purchasing that upgrade version.

Moving down in versions is also possible, say from Windows Vista Ultimate to Windows 7 Professional. However, with any downgrade, a clean installation is required.

Microsoft has shown Windows 7 running on Netbooks ever since it introduced the operating system last fall. However, helping consumers get it on their notebooks has proven more tricky.

(Credit: Ina Fried/CNET)

Microsoft is considering offering Windows 7 on a thumb drive to allow Netbook owners to more easily upgrade their machines, a source tells CNET News.

The move, which is still under consideration, is one of several things Microsoft has looked at to try to make it convenient to upgrade machines that don't come with a CD or DVD drives.

Microsoft executives have said that they recognize that upgrading Netbooks poses a challenge and are exploring ways that the company can make it easier. In an interview on Thursday, Senior Vice President Bill Veghte said that Microsoft had nothing to announce on that front.

The challenge of getting Windows 7 on to older Netbooks threatens to cast a shadow over the technical work Microsoft did to get Windows 7 running on Netbooks. Its predecessor, Windows Vista, proved ill-suited to Netbooks forcing Microsoft to continue selling Windows XP as its answer to the low-cost notebook phenomenon.

Although a USB flash drive could offer the simplest way to move a Netbook to Windows 7, there are other options. Buyers with an external drive could hook up that to their Netbook, while another option would be an upgrade through a service such as Best Buy's Geek Squad. Microsoft also sells a downloadable version of Windows today, so, in theory it could do the same with Windows 7, allowing buyers to put the OS on their own thumb drive.

Matt Bonin, a merchant director at Best Buy, said this week that the company is aiming to work with Geek Squad to develop services to streamline Windows 7 upgrades. As for Netbooks, he said the company recognizes the challenge they present and said the store already offers services to load other types of software, such as antivirus programs.

Complicating matters further is the fact that most Netbooks are running Windows XP. Those moving from Windows XP can buy an upgrade version of the software, but must back up their data, do a clean installation of the operating system and then reload their applications.

The same goes for all XP owners, as well as users looking to move from a higher-end version of Vista to a lower-end version of Windows 7 and all users in Europe trying to upgrade to Windows 7 using the browser-less "E" version--the only one Microsoft plans to offer there.

Microsoft on Thursday announced a new wireless mouse aimed at the burgeoning Netbook market.

The Wireless Mobile Mouse 4000, which goes on sale in August, comes in a bunch of colors and has a small USB transmitter that sticks out less than a centimeter from the computer. Microsoft argues that means the mouse transmitter can remain plugged in all the time, of course that assumes that the Netbook has enough USB ports that one can be dedicated to a mouse.

Microsoft's Wireless Mobile Mouse 4000 is aimed at the growing Netbook market. It will be available in August for $40.

(Credit: Microsoft)

The thing that really struck me is that, at $40, the mouse costs more than the revenue Microsoft gets from selling Windows XP on the same Netbook. (Of course, once you throw in the retailer's cut, the manufacturing cost and other things, Microsoft makes way more profit from that copy of Windows XP.)

Still, it's a good way for Microsoft to try to make up for the fact that it generally makes less from Netbooks and that this is the only part of the PC market that is growing. Microsoft's press release touts market research predicting 35 million of the diminutive portables will be sold this year.

I would also note that in its excitement over the Netbook business, the hardware unit appears not to have gotten the message that the Windows folks would prefer these things be referred to as small notebook PCs.

Microsoft confirmed on Friday that, with Windows 7, it will lift the limitation that the entry-level "Starter Edition" run no more than three applications at a time.

With Windows 7, Microsoft is for the first time allowing the product to be used globally, as opposed to just in emerging markets. In particular, Microsoft is positioning it as its lowest-cost Windows 7 option for Netbooks.

Initially, Microsoft said it would maintain that restriction that users run no more than three programs at a time, however speculation has been growing that it would lift that limitation.

"We believe these changes will make Windows 7 Starter an even more attractive option for customers who want a small notebook PC for very basic tasks, like browsing the Web, checking e-mail, and personal productivity," Microsoft said in a blog posting on Friday.

Although Microsoft is lifting the three-application limit, it notes that there are still a number of other differences between Starter and Home Premium, including the former's lack of support for Windows 7's cool graphics, multiple monitors, Windows Media Center or XP Mode, among other features.

With Windows 7, Microsoft may lift one of the biggest limitations of its Starter edition--the restriction that the operating system run no more than three applications at a time.

Blogger Paul Thurrott said in a posting Friday that Microsoft plans to remove the restriction, without elaborating.

Microsoft neither confirmed nor denied whether such a move will take place.

"We continue to work on developing Windows 7 and have nothing new to share at this time," a Microsoft representative said on Friday.

With Windows XP and Windows Vista, the Starter edition was sold only for use on new PCs sold in emerging markets. With Windows 7, Microsoft said it would also sell Starter in developed markets such as the United States as an added option for low-cost Netbooks.

Separately, enthusiast site TechARP wrote Friday that Microsoft plans to change its rules in terms of what hardware qualifies for the Netbook designation. Microsoft declined to comment on the report or its plans in that area.

See what's new in Windows 7 RC--photos

With Windows 7, Microsoft has done the technical work to make the operating system work on Netbooks, but the low-cost laptops still pose a challenge to the way Redmond does business.

As the only fast-growing part of an otherwise sluggish PC market, Netbooks are clearly a product category that Microsoft can't afford to ignore. At the same time, computers selling for only a couple hundred dollars don't give Microsoft the opportunity to get the kinds of revenue for each copy of Windows that it is used to receiving.

Microsoft is hoping Windows 7 provides an opportunity to move Netbooks up the food chain, with the distinction between such devices and traditional laptops eventually going away entirely.

"Our position is that Netbooks are small notebook PCs," said Don Paterson, a director in Microsoft's Windows unit. "The distinction that has existed around Netbooks is, to some extent, a creation of the industry's mind."

Although it will offer a low-cost version of Windows 7--Windows 7 Starter--to compete with Linux to power the cheapest of Netbooks, Microsoft is ultimately hoping consumers and PC makers will pay more to get the "home premium" version of Windows Vista, which supports things like a touch screen or the Media Center interface.

"We're pretty squarely focused on thinking the sweet spot moving forward on Netbooks is going to be home premium," Paterson said. "We are going to try (to) rally the industry around that vision."

Key question
But analysts say that could be a tough proposition. The key question is whether consumers really want more bang from their Netbooks, or if they just want to spend as little as possible on a machine that can do the basics of Web browsing and e-mail.

Michael Cherry, an analyst with Directions on Microsoft, thinks that Netbooks are fundamentally about the latter.

"I think its a computer that is about price," Cherry said. "I don't think it is a computer that is about features."

That Microsoft is even in the game technically represents something of a reversal of fortunes. Microsoft has been playing catch-up since the market took off with the introduction of Asus' Eee PC several years back. Many of those first machines ran Linux, representing the open-source operating system's first big shot at powering the mainstream desktop.

At the time, Microsoft was moving from Windows XP to the far more demanding Windows Vista, whose memory and storage needs were ill-suited to the low-end Netbook. As a result, Microsoft kept around the aging XP to compete against Linux on Netbooks.

When it came time to build Windows 7, Microsoft focused on creating a product that can run on the kinds of hardware being used in today's Netbooks. Ultimately, Microsoft says that all of its versions of Windows 7 should be able to run comfortably on a standard Netbook configuration with 1GB of memory and a 1GHz processor.

Now, Microsoft would like to see what it can do as far as making some money off the machines. At the low-end, Microsoft is bringing over Starter Edition, a severely limited version of Windows that has historically only been sold in emerging markets. Machines running Starter, for example, can only run three applications at any one time.

Netbooks of the future
But really, Microsoft is aiming to make the Netbook market more like the traditional PC market, with Home Premium being the standard option. Paterson said Microsoft thinks Netbooks can evolve to handle more media-playing capabilities, the kinds of things that require Windows Home Premium.

Cherry, though, thinks that what consumers really want is the cheapest possible PC. And just the fact that Microsoft can get its highest-end versions of Windows 7 running on a Netbook doesn't guarantee a market.

"Although Microsoft can get it to run on Netbooks," Cherry said, "the economics on the bill of materials probably limits what Microsoft can make on each one."

But Sandeep Aggarwal, an analyst with brokerage firm Collins Stewart, thinks that many people are underestimating Windows 7's Netbook opportunity. In a research note this month, Aggarwal said Microsoft stands to make as much as $680 million more next year on notebooks by having a range of products that can run on the machines.

Before Windows 7, Aggarwal estimates that Microsoft was getting $23 for each copy of Windows XP that sold onto a Netbook. With Windows 7, Aggarwal said he is estimating revenue as high as $58 per unit for home premium, with Windows 7 Starter fetching around $25. Aggarwal figures that four-fifths of Netbooks in mature markets will ship with the pricier version, compared to just 20 percent running Starter Edition.

In emerging markets, Microsoft will also have a Home Basic option that Aggarwal figures will account for the bulk of sales. Even still, though, Aggarwal is assuming Microsoft will get $17 more for each copy of Windows 7 Home Basic than it did for Netbook sales of Windows XP.

Paterson said that adding more features ultimately means that consumers get a better experience and helps computer makers avoid competing solely on who can offer the lowest price.

"What's the industry's advantage in saying lets drive this thing to rock bottom," Paterson said. "What we are enabling with Windows 7 (is the ability) to try to maintain higher average selling prices...This doesn't have to be about who can get to $199 first."

Microsoft has been growing its share of the Netbook segment in recent months, but it's largely on the back of the company's older Windows XP product, rather than Windows Vista.

The trend toward the small, cheap notebooks has not been lost on the software maker, however. When the topic turns to Windows 7 at the Professional Developers Conference next week, I would expect the software maker to talk about an operating system that can run well on all manner of laptops, including the ultra-low-end.

It's just one of many topics expected to come up at the conference, which takes place in downtown Los Angeles next week. CNET News will be there in force with live blogs, analysis, and some really high-level executive interviews. You can find all our PDC coverage both now and during the show from our PDC special coverage page.

Most of the Windows talk at next week's show will come Tuesday, on day two of the event, while the first day's keynote speech is expected to focus on "Windows Cloud," or "Windows Strata," or whatever the company has decided to call its cloud-based operating system. Steve Ballmer mentioned Microsoft might have a trademark by the time of PDC, but my search Friday didn't turn up anything for Windows Cloud or Windows Strata.

Day two will also feature talk of Office 14, the next version of Office, with sources saying that the company will show off some features, including its ability to run inside a Web browser.

As for the Netbooks, it's a critical segment for Microsoft to be competitive in, growing far faster than the market as a whole. It's also the first slice of the desktop market where Microsoft has seen a significant level of competition from Linux.

After many of the initial models were Linux only, Microsoft has hustled back with versions of XP that can run on flash-based memory. As some of the Netbooks have started to come with traditional hard drives, some Vista models, such as HP's 2133, have also cropped up.

Microsoft has declined to comment on Windows 7 ahead of the conference. The company has said that it will outline the product in detail and give attendees a pre-beta version of the operating system.

Click here for more news on Windows 7.