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New Microsoft system continues bundling tradition

Windows Me puts the software giant back into familiar territory: bundling several different technologies into its operating system.

Windows Me puts Microsoft back into familiar territory: bundling several different technologies into its operating system.

Windows Me is Microsoft's next operating system for home users. The company demonstrated the latest features for the first time this past weekend, revealing tight integration with several Microsoft technologies, including Internet Explorer, Windows Media Player and links to MSN Internet sites.

Microsoft has forged ahead with bundling despite legal controversies about the company's bundling policies and growing industry scrutiny focused on these types of business practices.

Formerly code-named Millennium, Windows Me is the third and last version of Windows 98. Set to be released later this year, the operating system is targeted at home PC users. It focuses on improvements in four areas: digital media, home networking, the Internet and PC "health"--the company's term for maintaining the reliability of the operating system.

The decision to integrate Internet Explorer into Windows 98 helped spark antitrust litigation from the Justice Department in a wide-ranging suit that was decided last week in favor of the government.

Integrating functions into the system, however, has been a given at Microsoft for years.

"This is evidence that they haven't been swayed in their product development by the antitrust trial. It's not going to alter the way they do product development," said Dwight Davis, an analyst with Summit Strategies. "It wasn't the first time that they (integrated new functions), and it won't be the last--unless there's strict government oversight, and I don't see how that's practical."

Microsoft executives said software developers weren't distracted by the company's legal woes.

"Nothing was influenced by the legal stuff--I let the legal people do their stuff, and I do mine," said Art Pettigrue, a product manager in the consumer Windows division at Microsoft. "We were really heads-down on delivering this."

Integration generally takes two forms. Some technologies, such as Internet Explorer, are woven into the OS, while others are given preferred placement. For example, Windows Me includes direct links so certain Web sites don't need a browser window open beforehand, such as MSN content accessible from the "Games" drop-down menu off the "Start" menu.

The games menu includes links to online games, along with the familiar standbys such as Solitaire and FreeCell. The online games are hosted by MSN, although nothing on the menu reveals them as such.

Presumably, online games from other companies will have a difficult time getting placed within the desktop menu; at the minimum, a person would have to launch a browser window to get to them.

Even though development of the operating system's features was set far in advance of the legal ruling, Windows Me sends a powerful message to Microsoft's detractors, say analysts.

"Clearly, this is Microsoft's way of letting the market know very clearly that it is 'business as usual' for them," said Gartner Group analyst Michael Gartenberg. "Microsoft will continue to do things as they see fit--they don't want to be caught in the position of taking their eye off the ball."

Integrating isn't necessarily a competitive ploy either, said Barry Jaruzelski, an analyst with Booz-Allen & Hamilton. Microsoft has long tried--so far unsuccessfully--to integrate speech recognition into the OS. "They've put huge investments into voice recognition technology," he said. "I could imagine having that technology fundamentally grounded in the OS makes sense out of the necessity to enable things."

In addition to the games menu, Windows Me gives other Microsoft technologies preferred placement, including Windows Media Player. With enhanced and updated features, the new version of the player is capable of connecting to and searching for online music sites without launching a separate browser window, according to Microsoft's Pettigrue, who disputed that the new version hurts competition.

"I don't think it locks out competition," Pettigrue said. "Instead, it's probably going to open digital media to the masses."

Links such as these, though, seem less essential, said Jaruzelski. "Launching your game site is probably less of a necessity."

Windows Me also changes the Windows Update feature of Windows 98, which had provided access to bug fixes and other noncritical updates from a dedicated Web site. Building on that, Windows Me directly communicates with the Windows Update site and offers to download patches and new features without the computer user launching the browser or explicitly visiting the site.

The integration of these MSN Web sites is more than a public renewal of the company's vow to continue to innovate. Along with the addition of digital video editing software, system restoration software and home networking technology, integration also reflects the evolving nature of the concept of an operating system, analysts say.

As the largest OS company, Microsoft has had the strongest hand in shaping that definition, which has long since exceeded its original goal of merely allocating system resources and acting as a buffer between hardware and software.

"Traditionally, the OS can be rudimentary, simply the kernel that lets the PC boot up," Gartenberg said, noting that digital video editing and system restoration software were not part of the original OS concept. "Microsoft would argue it's at the discretion of the vendor to determine where the definition lies.

"That argument is fair unless you happen to be in the digital editing software business or the system restoration business."