MICROSOFT moves ahead with Windows XP

Sunday, July 29th 2001, 12:00 am

By: News On 6

SEATTLE (AP) _ Undeterred by legal threats and political pressure, Microsoft Corp. will move forward with plans to release Windows XP in October, a company executive said Friday.

Microsoft will ship the final test version of the desktop operating system Saturday, said Group Vice President Jim Allchin, who is overseeing the product's launch. The company plans to have a version ready to be manufactured in the next few weeks.

Allchin said Microsoft is making no contingency plans for meeting demands that the new system be altered.

He called criticism that the system hurts competition ``very serious,'' but insisted it was unfounded. Windows XP works well with other products and gives consumers plenty of choices, he said.

Earlier this week, U.S. Sen. Charles Schumer asked some of the 18 state attorneys general who brought an antitrust suit against Microsoft to go to court to stop Windows XP's release.

Windows XP will include more Microsoft products than ever, including an instant messaging system that competes with AOL's, and an expanded music and video player that competes with RealNetworks'. The company also sees Windows XP as a way of introducing its planned paid Internet subscription services, called HailStorm.

Schumer and others argue that Windows XP will shut out competitors. They have asked Microsoft to make it easier for competitors' products to be featured on computer desktops and for Microsoft products to be removed.

Pressure to change Windows XP comes after the U.S. Court of Appeals for the District of Columbia ruled in June that Microsoft had operated as an illegal monopoly and limited consumer choice.

The ruling also reversed the trial judge's order breaking up the company and said a different judge must decide a new penalty.

Microsoft says it hopes to settle the case as quickly as possible.

In response to the appeals court's ruling, Microsoft changed its contracts with computer manufacturers to let them remove icons for its Web browser, and let consumers remove the program altogether. During the antitrust trial, Microsoft claimed that couldn't be done.

On Friday, Compaq Computer Corp. became the first computer manufacturer to take advantage of Microsoft's loosened restrictions, announcing that it would promote America Online's Internet service over Microsoft's in Windows XP.

Allchin said Compaq's decision would make AOL's service the first option consumers see and reduce Microsoft's MSN service to a less prominent place. The decision is akin to ``hiding features from consumers,'' he said.