Test versions of the new operating system have alternately included and excluded an encoder that would allow people to convert audio tracks from CDs to the MP3 format, according to Windows XP Product Manager Tom Laemmel. A decision has not been made on whether an encoder will be included in the final version of Windows XP, scheduled to be released in October.
Even if the company does include an MP3 encoder, it is likely to be a version that does not produce high-quality copies because the cost would be prohibitive to the company, Laemmel said.
Including an encoder would represent a shift from Microsoft's current stance toward MP3. Although previous versions of its operating system have supported MP3 encoders from other companies, Microsoft's own audio and video software, Windows Media Player, has converted audio files only to the Windows Media Audio format, dubbed WMA.
Laemmel said an early test version of Windows XP included an encoder, but it has been dropped from the most recent beta. A decision on whether it will be reinstalled is not expected until later this summer.
With or without its own MP3 encoder, the latest version of Microsoft's media technology will likely have the highest level of support yet for the MP3 format, Laemmel said. That's because Windows Media 8, which will be embedded in Windows XP, has been designed for the first time to support third-party MP3 encoders.
Microsoft's historically wary approach toward MP3s reflects its campaign to replace the renegade format with its own WMA technology, as well as the slow inroads the company has made on that front.
Microsoft's repositioning would be a bigger deal if Windows Media Player would no longer play MP3 files, said Guernsey Research analyst Chris LeTocq.
"What's really interesting is that you can rip MP3s with Windows Media Player using somebody else's encoder," LeTocq said. "I think the message here is Microsoft doesn't want to pay the license fee for the encoder."
Microsoft has long proclaimed the superiority of its codec, or the mathematical formula that is used to compress bulky audio files to a manageable size with the minimum damage to the sound quality. According to Microsoft, WMA offers the same audio quality as MP3 using about half the file size--a potential benefit for those who want to store large amounts of digital music on a PC or a portable MP3 player.
Thomson Multimedia, which licenses the rights to MP3 technology, on Thursday plans to respond with an upgrade to its format, dubbed MP3Pro. The new codec will reduce file sizes while improving the sound quality, Thomson says.
In addition, record labels have been supportive of WMA because it includes built-in anti-copying technology.
All the same, consumers have overwhelmingly endorsed MP3s, which have been traded by the billions on file-swapping services such as Napster.
By considering whether to include an encoder within Windows XP, Microsoft could be tacitly acknowledging the popularity of a format that is virtually synonymous with music on the PC. However, even if it includes an encoder, the company appears concerned with undermining its own format.
In testing an embedded MP3 encoder in an early beta of Windows XP, for example, Microsoft opted to license a budget version of the technology that provides considerably less fidelity than other available versions.
Microsoft's Laemmel said the sticking point was the price. Thomson offers to license its MP3 technology to third-party encoding developers for $2.50 per unit, according to its Web site. In addition, it offers a demonstration option for a flat fee of $100,000.
Microsoft has not said how much it will charge for Windows XP.