Microsoft: Windows XP on track

Microsoft Corp.'s top executive in charge of its operating system said Friday the company is on track to release its controversial Windows XP operating system by the Oct. 25 deadline, and is not preparing a contingency plan to fend off government and industry attacks.

"We're not ignoring it. We consider it to be very serious," said Jim Allchin, group vice president for Windows at Microsoft, of this week's dousing criticism from the U.S. Congress, privacy groups and competitors. "The product that I see written about is not the product that I'm building."

With 90 days left until the release of what the company considers its most advanced operating system, Allchin stressed in a conference call Friday that the product is open to partners, competitive software products and industry standards.

"Frankly, the industry needs this product," he said. "We are keeping very focused on delivering for the 25th."

But a number of foes are hoping to stall that launch. This week, the upcoming Microsoft operating system has been targeted on three occasions for allegedly having the potential to harm consumer privacy and competitors. A number of privacy groups have petitioned the U.S. Federal Trade Commission to halt the Windows XP release due to concerns they have over the company's Passport authentication technology; they allege the registration process violates the FTC's unfair and deceptive trade practice statute.

A technology firm called InterTrust Technologies Corp. is hoping to stall Windows XP with a patent infringement suit it has filed against Microsoft, charging that the company infringed on patents for digital rights management technology. And New York Democratic Senator Charles Schumer asked Congress Tuesday to investigate Microsoft's plans to bundle applications with Windows XP, pressuring Capitol Hill to stand in the way of a scheduled release pending an investigation.

"I think there's a very, very small chance that there's going to be some kind of injunction against (Windows XP)," said Tom Bittman, an operating system analyst with research firm Gartner Inc.

If an injunction were to pass muster, it would most likely be based on a complaint from the government rather than a technology competitor, Bittman added. "That being said, the amount of industry players that are looking for this release as a way to jump-start sales is dramatic. These companies would just scream if the government tried to stop this release."

The company will ship Release Candidate 2 of the operating system to manufacturers Saturday, Allchin said. Following comments and feedback from the more than 500,000 beta testers of early versions of the product, Microsoft has removed the Smart Tags feature from the operating system and from the Internet Explorer browser that ships with the operating system. The controversial feature identifies keywords in user documents and suggests links to related Web sites. Microsoft has been criticized because many of the suggested Web sites are operated by Microsoft or its partners.

Release Candidate 2 will ship, however, with a clean desktop -- the screen users see when they first boot up a PC -- as the company has said earlier. Unlike previous versions of Windows, icons and folders will not appear on the desktop. Consumers who receive Windows XP preinstalled on a PC from manufacturers, will likely see icons from Internet service providers and other software makers. AOL Time Warner Inc., for instance, is dealing with PC makers to have its Internet access software preinstalled on computers. AOL Time Warner has already reached such an agreement with Compaq Computer Corp. With 90 days until the launch of Windows XP, Allchin said the company is working fervently to ensure a smooth release. He said engineers "are in fact sleeping in their offices to get this product finished."

Microsoft also plans to spend about US$200 million marketing the operating system globally during the first four months the product is on the market.

"We expect to reach 85 percent of the target audience with that marketing campaign," Allchin said. Microsoft estimates it is targeting a potential installed base of about 180 million machines worldwide -- citing the number of PCs sold in the last three years that meet minimum system requirements for Windows XP -- as well as another 140 million users who could potentially upgrade to the operating system by purchasing a new computer.

"I think it's overly optimistic in a big way," Gartner's Bittman said, referring to Allchin's estimate. Despite a heavy investment in marketing by Microsoft and PC manufacturers hoping to increase sales based on the release, Gartner doesn't predict the release will ignite consumer sales too dramatically.

"Windows XP is going to be a fine release, it will have good function for consumers and the enterprise," he added. "The problem is we don't know if there's enough value prop for consumers. It requires pretty big hardware that many people don't have and there's the big inhibitor of 'will my applications work.'"

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