Microsoft Launches Windows XP

Microsoft Corp. officially launched the latest version of its flagship product Windows on Thursday, kicking off a $250 million marketing campaign with flashy events in New York and London.

Microsoft vowed the newest version of the Windows operating system would be twice as big as Windows 95, but there were doubts that it would reinvigorate the ailing PC industry.

The software, which promises features like digital media, games and photography, has been pre-installed on new personal computers for weeks now. But as of Thursday versions of the software for home and corporate consumers are being sold in shops for $199, or $99 for upgrades.

True to style, Microsoft was throwing launch parties around the globe, schmoozing thousands of customers and business partners. The festivities attempted to rekindle memories of the high-profile Windows 95 launch, when customers lined up in front of shops at midnight, boosting Microsoft's top line.

All of Microsoft's top dogs were reeled out for the event.

The XP launch is the biggest thing we've done since Windows 95,'' Microsoft Chief Executive Steve Ballmer told reporters at a launch demonstration in London on Thursday.

Co-founder and Chief Software Architect Bill Gates was scheduled to host a corporate bash in New York, the biggest such event since the September 11 attacks on the United States.

This is the kind of thing that will drag the PC industry back to record sales,'' Gates told CNBC in an interview on Thursday morning, ahead of the official launch in New York's Times Square. The new operating system is what brings in new capabilities.''

While instant messaging, digital photography and music files have been available for use on PCs for some time, only the most extreme person could have set those things up in the past,'' Gates said.

It's all about ease of use,'' he added.

Windows XP does away with the decades-old DOS fundamentals on which its predecessors were built, sharing instead the basic source code of Windows 2000, which analysts said makes the operating system much more stable and less likely to crash.

It should provide more stability than previous Windows versions,'' Andersen IT consultant James Alexander said.

Ballmer called XP a new standard'' in uncomplicated computing and said its trademark features were its reliability and compatibility. He admitted earlier versions of Windows, such as Windows NT, were either strong on reliability, or, as with Windows 98, were more compatible with other programs and hardware products, but not both.


Microsoft has long touted XP as the product that could help boost flagging PC sales. Global shipments of PCs tumbled by over 10 percent in the third quarter, its first decline since 1986, according to recent research from Gartner Dataquest.

But U.S recession fears and dwindling consumer confidence after the Sept. 11 terror 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 with Reuters on Wednesday.

In a now familiar Microsoft tactic, the latest Windows version requires more computer memory and a faster microprocessor, forcing businesses and consumers to upgrade their PC or, rather, buy a new one.

People need a powerful PC to run XP, which is why PC makers love it,'' Andersen's Alexander said.

Dataquest forecasts that the consumer PC market will move rapidly to adopt Windows XP for the home, with 87 percent of new Windows PCs running the new program in 2002. But in the business market, XP will be the choice of only 16 percent of Windows PCs. The older Windows 2000 will remain the preferred choice for business users, Dataquest said.

The merits of Windows XP had been discussed weeks before Ballmer and Gates took the stage on Thursday.

Many users complained some of their old hardware and software did not work properly under XP. But security experts praised the improved security of Windows XP against likely viruses and hacker attacks.

Others have strongly criticized the software giant for its decision to integrate dozens of Web features and tools that until now had to be separately installed, and could only be obtained from a variety of vendors.

Examples include a digital media player that competes with software from RealNetworks Inc. . The instant messaging software goes head to head with a rival product from AOL Time Warner Inc. and Yahoo! Inc. .

Microsoft's decision to integrate its Web browser into an earlier version of Windows was at the heart of the Government's antitrust case against the software company, which is still pending in U.S. District Court. The case returned to the district court after an appeals court in June found that Microsoft had illegally maintained its monopoly in personal computer operating systems.

But Microsoft vehemently denies those allegations.

The only critics I know of are the competitors who don't want the Windows platform to move forward,'' Gates said on CNBC, referring to Windows XP.

There's nothing that a third party can't add into Windows.'' Gates added. Its' a totally open platform.''

Meanwhile, the European Commission is currently probing Microsoft for illegally tying its Media Player with Windows. The software program allows PC users to receive video and audio over the Internet, and competes with products from U.S.-based RealNetworks and Apple Computer Inc. .

But consumers are unlikely to raise a fuss about the new features in XP, analysts


The vast, vast majority of consumers and businesses are not going to respond to those kind of complaints,'' Matt Rosoff, an analyst with Directors on Microsoft said on Wednesday.

By Siobhan Kennedy and Lucas van Grinsven. NEW YORK/LONDON (Reuters)

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