Windows XP to debut amid hopes, concerns

By Scott Hillis

SEATTLE: Microsoft Corp. is set to launch Windows XP, the software giant's most ambitious operating system yet, pitting those who hope the product will breathe life into the wheezing computer industry against critics who see it as an attempt to monopolize the Internet. Analysts say the product will do neither.

Microsoft co-founder and Chairman Bill Gates is to formally launch Windows XP on Thursday in New York, kicking off a $250 million marketing campaign by Microsoft and industry partners. The successor to the Windows Me consumer platform and the Windows 2000 business system, Windows XP (for eXPerience) combines the best of both, promising features like digital media, games and photography alongside rock-solid stability.

To hear Microsoft tell it, Windows XP is the best operating system ever. It is packed with features that consumers will love, and will be a foundation for new Web-based services that will help the entire software industry, it says.

"Every operating system release is critical to their business because it is the foundation upon which they build all of their products," Forrester Research analyst Bruce Kasrel said. "But XP is not a major paradigm shift in the way people use PCs, it is actually more of reflection of how people are already using their PCs, and is bringing that to the masses," Kasrel said.

The PC industry has been counting on Windows XP to help lift sluggish sales, but the slowing economy and the hit to consumer confidence from the September 11 attacks have dimmed hopes for an all-out revival of the sector.

"I'm very, very optimistic but I also have to say the world economy is not in gangbuster mode right now. Will this help? Absolutely," Jim Allchin, vice president of Microsoft's platforms group that oversees Windows, said in an interview.

This isn’t 1995

Analysts and observers largely agree Windows XP is a good product, but many say there is no compelling reason for consumers to rush out and pay $199 for the full version or $99 to upgrade from an earlier Windows.

"But it's not going to be anything like the huge spike we saw from Windows 95, but it will be better than Windows Me and it will probably be better than Windows 2000," said Matt Rosoff, an analyst with Directions on Microsoft, a Kirkland, Washington-based consultancy that exclusively follows the company and its products.

There are mixed signals on the corporate front, too.

Many corporations are still in the middle of rolling out Windows 2000, which was launched a year and a half ago. Some experts say the professional edition of Windows XP doesn't offer enough reasons to upgrade, especially given conservative corporate views toward new products.

One testing center run by weekly tech magazine InfoWorld found Windows XP to be slower than Windows 2000 at crunching large amounts of data, leading it to conclude: "Most businesses considering widespread adoption of Windows XP will be best served instead by phasing it in with new desktops, where the performance drag is less evident."

Others, however, say Windows XP fixes shortcomings in Windows 2000 while offering useful new features like remote troubleshooting, support for wireless networks and video instant messaging.

Big businesses could trim technology costs by up to 15 per cent by installing Windows XP, compared with savings of 10 percent for Windows 2000, said John McKenna, chief executive of Siemens Business Systems, which is helping other firms roll out XP on their networks.

"It might be a bit counter-intuitive, but even in challenging economic times there will be a great movement to migrate to the new platform because it can have a dramatic reduction in costs for large enterprises," McKenna said.

Don’t like it? Don’t use it

Not everyone views the product as benevolent. Critics charge XP shoehorns unsuspecting users into Microsoft services and gives the company an unfair edge in burgeoning areas like digital media and instant messaging.

Examples include a digital media player that competes with software from RealNetworks Inc. The new Windows Messenger takes on instant messaging services from AOL Time Warner Inc. and Yahoo! Inc. It has a built-in firewall to stop hackers -- which could be bad news for a slew of security software firms.

Microsoft responds that customers can choose not to use the extra software.

"XP runs AOL, Real, Yahoo IM, Netscape great. And if they want to use those products or other products, Windows XP will run them great. If you don't want to use our media technology, then don't, or our real-time communication feature, then don't, or Passport, then don't," Allchin said.

Privacy advocates like the Electronic Privacy Information Center (EPIC) are also up in arms over certain features in Windows XP they say compromise user privacy.

The complaints focus on Passport, an online authentication service that aims to streamline Web surfing and shopping by using a single password to access different sites and services. Microsoft eventually hopes to turn Passport into a digital wallet that stores credit card numbers and other personal data.

Reviewers are giving Microsoft the thumbs-down for pushing Passport too hard in Windows XP, noting that the system prompts users to sign up for an account five separate times.

Like color television

Another area that may raise hackles is a new "authentication" process that requires users to give Microsoft a code over the Internet or by telephone that assures their copy of Windows is not pirated or that they have not installed it on more than one machine.

"The authentication issue is going to be aggravating for a lot of people. And to be continually reminded to sign up for Passport is aggravating. It's kind of like spam," said Rob Enderle, an analyst with Giga Information Group.

But consumers are unlikely to raise a fuss over the other bundled software, despite high-profile complaints from rivals and politicians as Microsoft's antitrust trial drags on.

"The vast, vast majority of consumers and businesses are not going to respond to those kind of complaints. Most of those seem leveled by Microsoft competitors," Rosoff of Directions on Microsoft said.

In the end, Microsoft insists Windows XP is more than an incremental change. When asked why average consumers would want to upgrade to XP, Microsoft's Allchin said: "For the same reason they liked moving from black-and-white TV to color TV. It will be a much richer experience. It will be much more stable." "In fact, the question should be, why wouldn't you upgrade?" Allchin said.

(C) Reuters Limited 2001.