April 24, 2002 3:05 PM PDT

Gates: Custom Windows could run on PCs

By Joe Wilcox
Staff Writer, CNET News

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WASHINGTON--Microsoft Chairman Bill Gates acknowledged Wednesday that an existing version of Windows for ATMs and other specialized machines that lets companies drop included components such as a browser could be configured to run on everyday computers.

The admission may bolster the litigating states' claim that Microsoft could deliver a version of its flagship Windows operating system stripped of so-called middleware such as browsers and media players.

In their remedy proposal, now being weighed by the court, nine states and the District of Columbia are pushing for an order that would require Microsoft to sell such stripped-down, or modular, versions of its omnipresent operating system. These modular versions could come without the software giant's Internet Explorer browser, for instance.

In earlier testimony, the Microsoft chairman said that creating modular versions of Windows would wreak havoc on the functionality of the operating system and make for a marketing nightmare.

During cross-examination Wednesday, states' attorney Steven Kuney brought up the issue of Windows XP Embedded, a version of Windows made for gas pumps and other machines that contains the core elements of Windows but doesn't necessarily contain browsers or messaging software, depending on how it is configured.

Kuney asked Gates if Windows XP Embedded could be installed on PCs. Gates responded, "You could configure it for that."

But Gates said he didn't know of anyone who had done such a thing, later acknowledging that one reason is because Microsoft doesn't license XP Embedded for that purpose.

The states' remedy proposal is designed in part to address the Court of Appeals ruling that Microsoft's commingling of code for its Internet Explorer browser and for Windows was an anti-competitive act, intended to hamstring Netscape's Navigator product. The remedy provision also aims at similar actions on the part of Microsoft in response to products such as RealNetworks' RealPlayer media player and AOL's Instant Messenger messaging software.

The proceedings before U.S. District Judge Colleen Kollar-Kotelly, to determine a remedy for Microsoft's antitrust violations, entered their sixth week Monday. They are part of a continuing effort by nine states and the District of Columbia to bring harsher terms against Microsoft than those reached by the Justice Department and nine other states in a settlement proposed in November.

Gates testified that Microsoft had not clearly identified the boundaries between Windows and middleware such as IE.

But Kuney said that in fact someone at Microsoft must have clearly identified those components because XP Embedded--developed using the code base of Windows XP Professional, a corporate version of XP that's virtually identical to the main, consumer version--can be installed with or without such middleware.

Kuney asked Gates if Windows XP Embedded could be installed without Windows Messenger.

"You could build such a thing" by making sure nothing is included that depends on Windows Messenger, Gates testified. He answered similarly for Outlook Express.

Gates also acknowledged that "technically you could" install a version of Windows XP Embedded that would run Microsoft Office. The company's popular Office collection of software is viewed as an essential set of applications by many businesses and individual computer users.

Gates' answers could be important as Kollar-Kotelly considers the merit of the states' remedy provision.

A question of semantics
Kuney concluded his cross-examination about a half-hour before the court day ended. Microsoft attorney Dan Webb then asked additional questions, spending much of Gates' remaining time on the witness stand trying to rehabilitate his testimony on XP Embedded.

During Webb's questioning, Gates did not directly deal with whether it is technically possible to produce a stripped-down version of Windows, but instead focused on the language of the states' remedy.

"The (states') component boundaries...are completely open-ended," Gates said. Their "definition of middleware encompasses hundreds of thousands of things in the operating system," he said. Thus, unseen interdependencies between the operating system and middleware as defined by the states could lead to unacceptable performance.

XP Embedded does not address the remedies the states are seeking, Gates suggested. The states' remedy requires the removal of middleware without degradation of performance, Gates said, adding that XP Embedded cannot accomplish this, based on the states' remedy provision.

Gates concluded the day by telling the court the company "wants a remedy." He told the judge the states' remedy would "have dramatic effects" and Microsoft "R&D would go into a 10-year period of hibernation."

Earlier in the day, Gates said Microsoft considered its 1994 consent decree with the Justice Department to have been a very clear document. Despite that, Microsoft and the Justice Department later had a dispute over the integration of Internet Explorer with Windows 98.

After his first in-person court appearance in the 4-year-old antitrust case had come to a close, Gates told reporters outside the courthouse, "I'm glad I had an opportunity to share my story with the court." He said Microsoft is very serious about its efforts to "resolve the issues" at hand.

Chris Jones, a vice president responsible for the Windows client, is scheduled as Microsoft's next witness.

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