Report: Compaq to make Windows XP desktop AOL's turf

America Online Inc. (AOL) will get a prime spot on the Windows XP desktop of most consumer PCs sold by Compaq Computer Corp., while Microsoft Corp.'s MSN Internet access service will be tucked away, according to a published report Friday.

AOL will be the first Internet service consumers see when they start a new Compaq PC running the forthcoming Windows XP operating system. MSN won't be part of the computer's startup sequence, according to a report in the online edition of The Wall Street Journal.

The move makes Compaq, the world's second largest PC maker, one of the first to act on a relaxing of the licensing rules for Windows announced by Microsoft in early July. The software giant gave original equipment manufacturers (OEMs), such as Compaq, more flexibility to configure Windows, a concession after a ruling by a U.S. appeals court in late June. AOL has a longstanding relationship with Compaq; the service has been part of the startup screen of Presario consumer PCs for years. However, next to AOL's icon was always an icon for Microsoft's MSN. With the newly-relaxed licensing rules, Compaq is now free to remove the MSN icon, the report said.

MSN will still be part of the forthcoming Windows XP operating system, but the service will not be featured prominently on Compaq machines. Compaq is also negotiating with AOL to replace MSN as the standard Internet service on other PCs, according to the report.

The arrangement with Compaq is part of AOL's continued campaign to gain control of as many desktops as it can. Talks between AOL and Microsoft over whether to include a link to AOL on the Windows XP desktop collapsed in June. AOL is now offering to pay PC makers in order to win customers for its service. AOL wants PC makers to place advertisements on the desktops of computers based on the upcoming Windows XP operating system and will pay US$35 per customer that signs up for AOL's Internet service, the Washington Post reported Thursday. The release of Windows XP is scheduled for October 25.

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