Originally created 04/24/98

Microsoft prevents 'shell screens' on PCs

Two years ago, when a consumer flipped on a new personal computer for the first time, the image on the monitor often wasn't the "desktop" of Microsoft Corp.'s Windows 95, but a basic introductory screen designed by the PC's manufacturer.

The easy-to-use screens sometimes featured simple images that the user could click on with the mouse to start basic system functions: a calculator icon for a spreadsheet program, a note pad for a word processor or deck of cards for games.

Today, however, these so-called "shell" screens are nonexistent on new PCs. Microsoft's contracts with computer companies now require that its Windows desktop, complete with icons for Microsoft's Internet browsing software and its own Microsoft Network online service, be the first thing a user sees when a computer is turned on.

The requirement has emerged as an element of the Justice Department's investigation into Microsoft's business practices and could be targeted in a broad antitrust case the government is considering filing against the company, according to sources familiar with the matter.

Microsoft contends that the requirement is necessary to ensure that new users see the features Windows has to offer.

"Ideas that are being advanced by... competitors are really just a pipe dream with no basis in law," said company spokesman Mark Murray. "Under the law, a company has the right to ensure that its products are distributed in a way they designed them."

But some Microsoft rivals contend that the requirement is anti-competitive and an unfair use of the company's market power with the Windows operating system, which runs more than 95 percent of new PCs. They argue that PC makers should have more freedom to decide what users see when a machine starts, whether it be customized screen for auto-racing buffs or a word processor designed by a Microsoft competitor.

Microsoft's requirement, some critics say, largely serves to promote the company's own Internet browser and online service, as well as Internet sites with which Microsoft has a business relationship. The contract provision also squelches the market for shell programs that could compete with the Windows desktop, the critics say.

"It's a way for them to leverage their operating-system monopoly into other products and services," said Ken Wasch, president of the Software Publishers Association, a Washington trade group.

Critics say Microsoft would not be able to impose such conditions on PC makers in a more competitive market. PC makers "would just license a different operating system," said Wasch, who has urged Justice to address the requirement. "But there's no other game in town -- and Microsoft knows that.

Although Microsoft's requirement applies only to the first-time use, competitors say it effectively prevents shell programs from being used. To activate a shell program, a user would have to set it up themselves.

"It's now essentially pointless to develop a Windows shell," said Mike McCue, vice president for technology at Microsoft rival Netscape Communications Corp., which recently cut back efforts to build a Windows shell for consumers. "It's an unfair restriction. . . . A lot of people have decided that always booting up the standard Microsoft screen is not the ideal user experience."

The Justice Department's interest in the start-up restriction indicates regulators are not simply interested in the functions Microsoft puts in Windows -- namely, whether its placement of an Internet browser in Windows is legal -- but also conditions imposed on PC makers that want to license the operating system, legal specialists said.

PC makers have been very reluctant to criticize Microsoft's requirement publicly, but they have complained privately to Justice lawyers, the sources said. The firms have told investigators they worry that speaking out could harm their relationship with Microsoft, the sources said.

Compaq Computer Corp., which offered an "Activity Manager" shell on some of its Presario models until early last year, said it removed the program because of "customer feedback."

"People have gotten familiar with the Windows interface," said Brett Faulk, Compaq's Presario product manager. "If we were to put one of those alternative shells on a PC today, our customers would probably just remove it." Faulk would not comment on whether Microsoft's contract changes influenced the decision to drop the shell.

But executives at two other large PC makers, who spoke on the condition of anonymity, said they were upset with the start-up restriction but were unable to get Microsoft to change it. The executives said shell programs are a key way to differentiate their machines from competitors', particularly on store shelves.

One of the executives said his company wanted to add a pop-up menu that would appear the first time the computer starts, to be followed by a shell program for successive start-ups, but dropped the idea when Microsoft opposed it.

"We don't want to rock the boat," the executive said.


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