Microsoft alters OEM licensing

In what Microsoft Corp. openly admits is a reaction to the recent court ruling, the company announced on Wednesday that it is changing its OEM (original equipment manufacturer) licensing practices and will allow desktop hardware manufacturers to slightly alter the software.

Specifically, OEM's now can remove the "start menu entries and icons that provide end-users with access to the Internet Explorer components of the operating system" for Windows XP, Me, and 98, according to a Microsoft statement.

Microsoft will include Internet Explorer (IE) in the Add/Remove programs feature in Windows XP, and consumers will be able to use it to remove IE themselves if they so desire.

Also, PC manufacturers will retain the option of putting icons directly onto the Windows desktop.

"Microsoft is doing something they were asked [by the courts] to do a year ago and balked at," said Al Gillen, an operating systems analyst at Framingham, Mass.-based IDC.

During the course of the trial, Microsoft said that IE could not be removed from Windows without breaking the operating system.

Gillen said that Microsoft is preparing to try and settle the case by putting this stake in the ground as a place from which to start negotiations. "Microsoft realized the need to do something or other to make the case right," Gillen added.

Gillen continued, however, that Microsoft is conceding on battles it already won, specifically the browser competition with Netscape.

"If they offer the option to take IE off the desktop, who is going to do that anyway?" he said, adding that Microsoft already owns the browser market.

Another analyst said Microsoft was still offering only limited concessions.

"This involves just removing icons from the Start Menu," added Chris LeTocq, analyst at Guernsey Research in Los Altos, Calif. "You still will have Microsoft's opening screens, still have to have Media Player, MSN, the ISP access link, and the Windows Tour on the Start Menu."

"I think from a PR standpoint it is the right thing for them to do," he added. "I think for OEMs the opportunity to do a little more customization is a good thing."

Microsoft said it was responding to the court case.

"We recognize that some provisions in our existing Windows licenses have been ruled improper by the court, so we are providing computer manufacturers with greater flexibility, and we are doing this immediately so that computer manufacturers can take advantage of them in planning for the upcoming release of Windows XP," said Steve Ballmer, CEO of Microsoft, in a statement.

In response to the Microsoft move, a spokesman for Dell Computer said being able to add or subtract icons from the Windows desktop will give the Round Rock, Texas-based computer maker even more freedom to offer custom configurations to its customers.

"The feeling is we've always thought to derive the best options and flexibility for our customers, and this will not change things," Dell spokesman Tom Kehoe said.

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