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Microsoft Unveils Windows Product

By CLIFF EDWARDS, AP Technology Writer

CHICAGO (AP) - Weeks after a federal judge found Microsoft Corp. (NasdaqNM:MSFT - news) broke antitrust law, the software company unveiled its latest operating system, which continues to closely tie in its Internet browser - a practice that led to the company being branded a monopoly.

Company executives at a computer trade show here demonstrated their Windows Millennium consumer operating system, due out later this year.

In addition to Microsoft Internet Explorer browser, the new operating system, the sequel to the consumer-oriented Windows 98, also ties in software that allows consumers to download, store and share music, photos and videos off the Internet, posing a new challenge to the dominance of such companies as RealNetworks Inc. (NasdaqNM:RNWK - news)

Associated Press Photo

But in the demonstration before an audience Tuesday at the spring Comdex computer trade show, the digital media feature of Windows Me, as it has been dubbed, froze up and was not shown. Two years ago, Microsoft chairman Bill Gates was embarrassed at the same show when a demonstration of Windows 98 crashed.

Microsoft's decision to bundle nonessential software into its operating systems is the issue at the center of an antitrust ruling against the company.

U.S. District Judge Thomas Penfield Jackson ruled the company illegally tied its Web browser to the operating system to crush competitor Netscape Communications Corp. The government next week will present its proposed penalties against Microsoft.

Executives at the Redmond, Wash.-based company argue consumers and businesses want the ease-of-use provided by bundling software with its operating system, which runs tasks for most of the world's personal computers.

``Microsoft is continuing to make huge investments in our platform, in our technologies, to continue to bring forward the services and support we can provide ... as together we explore this new generation of computing,'' said Tod Nielsen, a vice president in Microsoft's platform computing group.

Windows Millennium has been in development since before the case was filed back in May 1998, said Microsoft spokesman Jim Cullinan.

``There has been no remedy issued in this case that prevents us from continuing to offer integrated products to our customers,'' Cullinan said.

Analysts say Microsoft's strategy has been to proceed with business as usual, including bundling new media software that is becoming increasingly popular with consumers, with the hope that the antitrust ruling will be reversed on appeals that could go all the way to the U.S. Supreme Court.

``I don't know if what they're doing is thumbing their noses at the government,'' said Tim Bajarin, president of Creative Strategies Inc., a Silicon Valley high-tech consulting firm. ``If you take Microsoft's initial position, by adding new features to Windows, that is part of the innovation process.

``And what the consumer really cares about is simplicity. From a user standpoint, I'd rather all the components I need to do something be in one place.''

The Justice Department and 19 states suing Microsoft have until April 28 to submit their proposed penalties. The company then would then have until May 10 to respond, and the government until May 17 to file its rebuttal.

Industry experts say that the remedial options likely to be considered by Jackson range from breaking up Microsoft to milder sanctions such as ordering the company to surrender its lucrative blueprint, the so-called source code, for its Windows operating software.


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