Originally created 10/26/01

Windows XP raises some troubling questions

It sports the same four-pane logo, but that's where most of the similarities between Windows XP and its predecessors end.

From its underlying code to its installation, the latest iteration of Microsoft's flagship program - due in stores Thursday - is in many ways a technological breakthrough for the firm. It's also one of Microsoft's most controversial products.

To consumers, Windows XP offers a more stable computing base compared to Windows 98 or Windows ME. That's because it's founded on the code for the other major flavor of Windows: NT, the industrial-strength operating system long employed by businesses.

For Microsoft, Windows XP represents even more.

It's the first of the software giant's operating systems to contain some of the underpinnings of .Net (pronounced dot-Net), a sweeping strategy to turn Microsoft's products into services available not only on PCs but on cell phones, digital organizers and other devices.

Previous versions of Windows and XP "are like night and day," said Rob Enderle, analyst at research firm Giga Information Group. "XP's mission is much broader - it has to connect to systems beyond the desktop. It's kind of like the change from feudalism to the Industrial Age where systems have to integrate, rather than being islands unto themselves."

For all of its technological advances, however, XP is also the subject of intense criticism. While Microsoft touts the system's reliability and new communication tools, some observers say the product is "anti-consumer" and an attempt to extend the company's dominance in the high-tech arena.

"They're obviously leveraging their monopoly into a whole range of new functionalities," said Mark Cooper, president of the Consumer Federation of America in Washington, D.C. "When you think about your operating system they have a monopoly, when you browse the Web you use a monopoly. Now they want to monopolize communication and control display of video and audio."

Cooper also says a new installation feature within XP, called "product activation," "violates the notion of fair use."

Ostensibly, product activation is designed to decrease piracy of the product - or "softlifting" as Microsoft calls it. In essence, XP requires licensees to register the product either online or over the phone. Microsoft stresses that no personal information is required; only the product ID number and a non-unique number generated by the user's hardware configuration. The process links that copy of XP to a particular computer. The software also checks itself periodically to ensure that it is on the same PC. As a result, users cannot copy XP and install it on another machine.

"For those who have gotten used to buying a disk and putting it on as many PCs as they feel like, that's going to be a hard slap of reality," said Dwight Davis, analyst at Summit Strategies, a market research firm.

Cooper puts it in starker terms. "It's like saying, 'I'll sell you this lamp, but you can only put it in your living room,' " he said.

On the other hand, Davis points out that most software makers prohibit users from making copies of their products. Microsoft is simply enforcing it.

Product activation isn't the only piece of Microsoft's strategy raising some people's ire. Passport, the Microsoft authentication technology that allows users to log on only once and gain access to various Web sites, is the cornerstone of its .Net My Services initiative. Next year, Microsoft aims to release various subscription-based Web services for shopping, banking and entertainment, all of which will rely on Passport for authentication. XP users must sign up for Passport in order to use the system's instant messaging application.

But Passport has come under fire from several consumer and privacy groups who claim the company collects too much information and may be selling that data to its partners.

Microsoft calls such criticism uninformed. "We've specifically said we will not sell the (Passport) information to our partners," said Microsoft spokesman Jim Cullinan.

What's more, Cullinan says Passport doesn't require users to provide an address or credit card number, only a user name and ZIP code.

But Enderle says data collection is not the real issue. He worries that a central repository with users' log-on information will offer hackers an irresistible target.

Another factor setting XP apart from some of its predecessors is the overhanging legal controversy. Government regulators engaged in the longstanding antitrust battle with Microsoft say XP is the company's attempt to broaden its software monopoly because it incorporates programs for playing videos and sending instant messages - applications offered as stand-alone products by some of Microsoft's rivals. Windows powers about 90 percent of the world's PCs.

Microsoft argues that it adds such features for consumers' benefit.

"It's like saying that instead of offering a fully-loaded car, you shouldn't include cruise control because someone else offers it," Cullinan said. "Right out of the box, XP offers the basic level of functionality. But if you want to use Shutterfly, Corel or Adobe to manage your photo services, you can."

Theoretically, Microsoft could be forced to make changes to XP as part of a penalty for antitrust violations. However, one legal expert said it is highly unlikely such a remedy would be put in place before Microsoft edges rivals such as AOL Time Warner and RealNetworks out of certain markets.

"We're going to have a fine world ... . It will just be a Microsoft world," said Bob Lande, an antitrust law professor at the University of Baltimore. "If you believe in consumer choice, and that competition is the best way to create consumer choice, that's sad."

But the biggest question swirling around XP may be whether it sells. Businesses may not have much choice. Under recent licensing changes, Microsoft is requiring many companies to upgrade by June or face much higher fees. In addition, Microsoft is pouring more than $250 million into marketing the product. And many of its high-tech partners are beating the drum.

"The whole industry is excited about XP. We're all looking for a shot in the arm," said Chris Pollitt, director of Sony's VAIO personal computer division.

But with businesses slashing expenses and many Americans still reeling from the Sept. 11 terrorist attacks, XP's launch may not mark the turning point for the industry.

"This is the most difficult time to bring out a new operating system in history," Enderle said. "And I'm not convinced that anything short of divine intervention could overcome some of the challenges facing Microsoft."


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