March 28, 2005
BRUSSELS, Belgium - Microsoft Corp. said Monday it would use an "N" to designate Windows XP versions stripped of the company's media player to comply with an antitrust judgment from the European Union.
The agreement with the EU came after antitrust regulators rejected Microsoft's first choice, "Windows XP Reduced Media Edition," on grounds it would discourage sales and mislead customers.
The player-free operating system will simply go by "Windows XP Home Edition N" and "Windows XP Professional Edition N" - the "N" standing for "not with media player."
A year ago, EU regulators ordered Microsoft to produce for European consumers a version of Windows without media player software for viewing video and listening to audio. Regulators had ruled that Microsoft abusively wielded its monopoly to lock out competitors, such as RealNetworks Inc. and its Real Player software. Microsoft also was fined a record $665 million and ordered to share some software blueprints. The Redmond, Wash.-based company is appealing.
Microsoft's top lawyer in Europe, Horacio Gutierrez, said company officials "have some misgivings" about the new name, but decided to cooperate "in order to move forward and accelerate the pace of the implementation process."
Gutierrez said Microsoft had given the EU nine different names the company was willing to accept, but the EU rejected them all.
Although the agreement on the name could clear the way for Microsoft to start shipping the player-free version to computer stores in Europe, software rivals are now complaining that the new version is not fully compatible with their programs.
EU spokeswoman Antonia Mochan said EU regulators "were still awaiting the results of market testing," adding that the issue "goes wider than the name."
The EU said last week it was assessing more complaints about Microsoft's compliance with the EU order.
The EU has said it could impose additional prohibitive fines of up to 5 percent of the company's daily global sales.
Microsoft has not disputed that its player-free version does not work as well as the full version, but argued it had to remove certain parts of the program to comply with the ruling.
The Association for Competitive Technology, a pro-Microsoft trade group, criticized the new name, saying consumers won't easily know from it that they are buying a version without media capability.
"If consumers are not well-informed of what version of Windows they are purchasing, they will have difficulty ensuring the programs they purchase will run on their machines," the group's president, Jonathan Zuck, said in a statement.
Shares of Microsoft fell 8 cents to close at $24.20 in Monday trading on the Nasdaq Stock Market. The stock has been trading at a 52-week range of $23.96 to $30.20.