MSN icon may join AOL on the desktop

ITworld.com –

Microsoft Corp.'s plans to ship PCs running its new Windows XP operating system without any icons on the startup screen, known as a "clean desktop," are getting cluttered.

The software maker confirmed today that it has required PC makers to include an icon that leads to its MSN Internet service on any computer that also displays icons from competing Internet service providers or application vendors.

"We prefer they ship a clean desktop," said Viveck Varma, a Microsoft spokesman. "If they decide to ship icons, we have asked them to ship the MSN access offer as one of them."

Microsoft relaxed the licensing rules for Windows in early July, giving manufacturers such as Compaq Computer Corp. more flexibility over how they configure Windows PCs. The company had originally planned to ship Windows XP with a clean desktop, and required manufacturers to do the same for copies of Windows preinstalled on PCs, but altered those plans in response to the ruling by the U.S. District Court of Appeals in late June.

The court -- which upheld part of the lower court's finding that Microsoft illegally quashed competition -- found that Microsoft's contracts with manufacturers impaired the distribution of third party Web browsers.

In response, Microsoft announced a new "flexibility agreement" that allows manufacturers to configure the desktop as they please.

Taking advantage of new flexibility to rent space on the desktop, Compaq said last week that it had agreed to a deal with AOL Time Warner Inc. to give its Internet service access icon an exclusive spot on the desktop of consumer PCs running Windows XP, due for release on Oct. 25. Under terms of the deal, an icon for AOL's Internet service would be the only icon that showed up when a user first turned on a new PC, called the "out-of-box-experience."

But that deal is now under question. Microsoft said it had built a clause into the flexibility agreement that forces PC makers to include the MSN Access icon alongside any third-party icons. A Microsoft spokesman said it was just an extension of its six-year-old agreement with OEMs.

However, Compaq's plans don't support Microsoft's claim that an icon to access its MSN Internet service is entitled to space on the desktop.

"We're continuing right now with our strategy that AOL is the only icon on the desktop," said Roger Frizzell, a spokesman for Compaq Computer Corp. "At this point it's certainly not an issue with us. Microsoft has not come to us yet."

AOL and AOL Time Warner-owned CompuServe Interactive Services Inc. were to be the only Internet services with an icon on the Windows XP desktop installed on Compaq consumer PCs and notebooks. Under those proposed terms Microsoft's MSN Internet access service would be limited to exposure in the "start menu," where Microsoft has always said it would allow third party vendors to promote software and applications.

"That could change if Microsoft comes back to us," Frizzell said. "Currently, though, we're staying with course until we hear otherwise."

While Compaq said it has not yet changed its plans to give AOL the foremost placement on its PCs, it could be contractually obligated to promote MSN Internet Access as well. This is already creating waves at Compaq. Kevin Kyle, director of marketing for access services at Compaq, said in an interview Friday that Compaq would rather see Microsoft pay for desktop space as was the case with AOL Time Warner.

"AOL negotiates and pays for its position, while Microsoft dictates it," Kyle noted.

But Varma said Microsoft is only sticking to its agreed upon contract with PC makers, and criticized AOL Time Warner for its efforts to bump MSN from the desktop.

"Like AOL we may enter into comarketing deals with OEMs to promote MSN to customers," Varma said. "Unlike AOL, we will not pay OEMs to exclude other Internet access offers."

(Joris Evers, an IDG News Service Correspondent in Amsterdam, contributed to this report.)

Microsoft in Redmond, Washington, can be reached at +1-425-882-8080 or http://www.microsoft.com/. AOL Time Warner, in New York, can be reached at +1-212-484-8000 or http://www.aoltimewarner.com/.

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