Microsoft ties Media Player to Windows XP

NEWS Microsoft will require consumers who want to use the latest version of Windows Media Player to upgrade to the new Windows XP operating system -- a move that is reminiscent of the company's controversial decision to tie the Internet Explorer browser with Windows. Windows Media Player 8 will be bundled with the forthcoming Windows XP -- the upgrade to Windows 95, 98, Me and 2000. A similar "tying" of Internet Explorer with the OS in 1996 is credited with helping Microsoft win the browser war against Netscape's Navigator and has been a key issue in the antitrust case that is awaiting a decision by a federal Court of Appeals. However, with Windows Media Player 8, Microsoft is going one step further than it did with Internet Explorer: the newest version of the application will only be available to consumers who upgrade to Windows XP. The older version of Media Player, version 7.0, will continue to be available as a free, separate download. Some analysts were critical of the move, considering the legal and public relations troubles that were caused by tying Internet Explorer to the OS. "No matter what the courts say (about the legality of bundling), Microsoft will look like a bully and get called a bully," said Frank Gillett, senior analyst with Forrester research. "It's bad PR, so why the hell are they hitting themselves in the foot again?" Repeating the company's argument for bundling Internet Explorer with Windows, a Microsoft representative said Media Player 8 includes new features that require close integration with Windows XP for optimal performance. "There are some features with Windows Media Player that can only be delivered with Windows XP," said Jonathan Usher, Microsoft's group product manager for Windows Media Player. These include CD burning and DVD movie playback, among other features not available with earlier versions of the product. Microsoft's decision to couple Internet Explorer with Windows, called "tying" in legal parlance, helped shut rival Netscape out of the browser market, federal and state trustbusters contended in a case they won at trial. Microsoft is awaiting an appeals court ruling on the matter that could result in a breakup of the company. When it tied Internet Explorer to the OS, Microsoft was attempting to boost market share for the browser. With Media Player 8, the company also could be trying to spur demand for its new OS, Windows XP, analysts said. "I see this as trying to add value to the OS and trying to get people to move to the OS rather than upgrading to the media player for free," said Gartner analyst Mike Silver. But he said he doesn't think it is enough of a reason to buy Windows XP. "They're grasping at straws," Silver said. Others agreed that Microsoft appears to be using Media Player to boost acceptance of Windows XP. "Within Microsoft, Windows Media Player 8 is very much a favorite of Jim Allchin's (the Microsoft vice president who also drove Windows and Internet Explorer development). "It's a pet project, and I'm sure from his standpoint he sees it of significant value to try and make it one of the reasons people will upgrade to Windows XP," said Guernsey Research analyst Chris LeTocq. The new bundling move could also put further pressure on competitive products, including RealNetworks' RealPlayer 8 and Apple Computer's QuickTime 5.01, analysts said. Other companies that stand to lose from the action are Roxio, maker of Easy CD Creator 5, and InterVideo, with its WinDVD. Jupiter Media Metrix reports that media players are pre-installed on almost all PCs, but fewer than half of consumers use the products. The research firm therefore ranks media players by usage: 28 percent for RealPlayer, 22 percent for Windows Media Player and 4 percent for QuickTime. Steve Banfield, general manager of RealNetworks consumer products dismissed any threat the bundling might pose. "There are no parallels with the browser," he said. "Microsoft has been shipping various versions of their media player in various flavours of their operating systems for years. We still have 85 percent of the streaming content on the Web in our format and 200 million unique users. He noted that RealPlayer is bundled with AOL 6 and the Netscape browser. But Emmett Stanton, an antitrust attorney with Fenwick & West in the US said that Netscape at one time had huge browser market share and lots of users. That changed with the introduction of Internet Explorer 4, "when Microsoft sought exclusive (PC maker and Internet service provider) agreements that locked out competitors." The media-player market popularized by RealNetworks bears striking similarities to the Web browser market of a few years ago. While media players are unlikely to pose a competitive threat to Windows, as trustbusters contended about browsers, they could provide a versatile means of extending Windows into other markets, said analysts. Such players are most commonly used to view live or prerecorded video content on the Web. Integrating the media player with Windows XP better positions the product to compete against RealPlayer and QuickTime. It could also bolster Microsoft's development efforts for games, where DirectX and Windows Media Player are emerging as top picks by developers. As a result, some analysts believe integrating Windows Media Player with Windows could help the company woo more developers for its forthcoming Xbox gaming console. "This is clearly a content leverage play," said LeTocq. "The question is will Xbox drive the standards here? You've got DirectX on the Xbox and the PC. What you have there is a cross-platform environment feeding Xbox and Windows XP supported by DirectX and Windows Media Player." At the same time, through its much-touted .Net software-as-a-service initiative, Microsoft increasingly is focusing on subscription revenue rather than software sales to sustain growth. Whether the company can succeed at this is uncertain. But as the company looks to deliver more content through the Web, controlling video-streaming standards would be a valuable asset, LeTocq said. By integrating Windows Media Player 8 with Windows XP, Microsoft could make it more difficult for competitors to distribute their players. And if fewer people are using competing media players, more Web sites could start offering content only viewable with Microsoft's product. PC makers would not comment on product plans, but several said that given declining sales they would do what economically makes the most sense. Because PC makers already pay a license fee for Windows XP, it's likely they would favour using the bundled Media Player 8 over products that must be licensed at additional cost. While consumers will have to pay for Windows XP to get the newest version of Windows Media Player, the company has no intention of ceding the market for standalone products. Product manager Usher said Microsoft would "continue to upgrade features to Windows Media Player 7 to remain competitive, and we will be looking at bringing some features from Windows Media Player 8." Microsoft also will ensure that older versions of Windows Media Player will be able to view content created for newer versions. See techTrader for technology investment news, plus quotes and research. Have your say instantly, and see what others have said. Click on the TalkBack button and go to the techTrader forum Let the editors know what you think in the Mailroom. And read what others have said.