In what can be viewed as a significant victory for the DOJ, Microsoft agreed to offer OEMs two new options that will enable them to sell PCs without Internet Explorer 3.0 or 4.0 bundled with the Windows 95 operating system. The government had argued that the Redmond, Wash., software giant flouted the order by offering PC makers versions of Windows 95 that don't work or were outdated. The most significant new development is Microsoft's agreeing to release a version of OSR (OEM Service Release) 2.5 that contains all of the latest Windows 95 features but does not include IE 4.0 or the Active Desktop. In addition, Microsoft agreed to let OEMs use a modified version of the Add/Remove utility that will hide or remove the main IE files, leaving the browser functionality inoperable. The modified version of the Add/Remove utility will remove some additional files from Windows 95 above and beyond the 26 files it currently removes. The agreement announced here today does not resolve all of the pending litigation involved with this case. For example, still to be decided are Microsoft's entire appeal of the Dec. 11 order, its petition to remove Lawrence Lessig as a "special master" as well as issues now before the special master himself. While today's action centered mainly on Windows 95, at a press conference held outside the U.S. District courthouse, Joel Klein, head of the DOJ's antitrust division, said the department is still investigating Windows 98 as well as other issues regarding Microsoft. A clearly pleased Klein said the settlement was exactly what the DOJ was looking for, saying it sends a message to software vendors that they are free to bring to market new ideas and to compete on the merits of their innovations "...and not be snuffed out by Microsoft's monopolistic power." "Today's decision is a victory for consumers and innovators," Klein said. In a brief statement, William Neukom, Microsoft's senior vice president for law and public affairs, said he was pleased with the settlement, adding that it allows everyone to get on to the larger issues at hand - namely, Microsoft's efforts to move on to the appellate process. Neukom noted that customers have always had a choice when it comes to browsing software. Both sides gave a little in reaching the settlement. The government dropped its request for a 30-day review period for all Microsoft OS upgrades, and Microsoft has granted any OEM that chooses one of the Windows 95 options not containing IE a 90-day grace period in case requirements are changed.