Microsoft split to dog Windows Me?

The US court decision to break Microsoft into two companies - now subject to an appeal - is likely to force the company to reconsider its entire consumer operating system strategy.

Microsoft was due to launch a new consumer version of Windows, Millennium Edition (Windows Me), later this summer. It may now have to postpone the launch or change the product's functionality.

The trial, which began two years ago, was instigated by the US Department of Justice and a host of individual states. They accused Microsoft of anti-competitive monopoly practices, whereby it used its market muscle with the Windows operating system (currently used on 90 per cent of PCs) to achieve dominance in the browser market.

Faced with the popularity of Netscape's Navigator browser, Microsoft gave away its Internet Explorer (IE) browser for free - and in some cases forced Windows PC manufacturers to give prominence to it. Netscape grappled with developing Navigator without having any revenue stream from the product, before throwing in the towel. The company was eventually acquired by AOL.

Earlier this month, the trial judge ordered that Microsoft be split in two - one company that sells operating systems and another that sells applications, like Office and IE. The split, if it is not overturned on appeal, will throw a big spanner in Microsoft's strategy with Windows, which went hand in hand with the company's attempts to embrace and control the data exchange standards used on the web.

Microsoft's aim has been to move to a situation where a user switching on a Windows PC or device will see a window onto the internet. If the split goes ahead, a user who buys a Windows PC will still have the option to install a browser from another company.

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