PC makers are posting "for rent" signs on the Windows XP desktop.
Taking advantage of a recent move by Microsoft to loosen its grip
on the icons and advertisements which appear on the start-up screen
of a new Windows PC, manufacturers are preparing to add third party
advertisements to the desktop. However, industry watchers warn that
too much clutter could send consumers packing.
Computer makers now have control over the screen "real estate" on
new computers running the Windows operating system, a power claimed
by Microsoft until July when the software maker was forced to offer
PC makers more flexibility over such decisions under pressure from
its ongoing antitrust battle with the US government.
AOL Time Warner was the first to announce that it would take
advantage of Microsoft's new flexibility agreement. It brokered a
deal with Compaq last week, and more deals are expected to follow.
"There certainly has been a flood of companies that have begun to
approach us," said Compaq spokesman Rick Frizzell. Other computer
makers, from Gateway to budget PC maker eMachines, said they too
have been approached by companies in search of desktop space but
remain cautious about which offers to pursue.
PC makers say they are worried that adding too many icons, links to
Internet services or advertisements runs the risk of alienating
customers. Many agree with Microsoft that consumers would rather
have a so-called "clean desktop", where icons and folders would
remain in the Windows start menu rather than on the start-up
screen.
Frizzell said, "If there's too much on the desktop, then you may
lose the value of what you were after in the first place."
A spokeswoman for eMachines agreed. The company currently posts an
icon on the desktop linking consumers to a promotional offer for
AOL's Internet services. AOL Time Warner is an investor in
eMachines and has a long-standing agreement with the company.
Since the early test releases of Windows XP, Microsoft has said it
would prefer the operating system to ship with a clean desktop. It
has recommended that to computer makers, although it gave up its
claim to impose the rule when the courts forced it to loosen its
contract agreements.
Microsoft still expects to ship shrink-wrapped versions of Windows
XP with a clean desktop, the company has said.
Gateway spokeswoman Lisa Emard said, "We totally agree with
Microsoft on the clean desktop and we've gotten similar feedback
from our customers." She noted the company had entered negotiations
about renting desktop space but had no plans to announce any deals.
One PC user, responding to Compaq's latest deal with AOL Time
Warner, said he would be turned off from buying a PC from a
manufacturer that clogged up the desktop with icons and
advertisements. "I personally do not want to see an offer for AOL
flashing next to my word processor," the user wrote in an e-mail to
the IDG News Service. "I don't believe AOL is going to be passed by
because it doesn't have a permanent presence on my desktop."
Similar consumer backlash is expected if the desktop turns into a
billboard for Internet offers, PC makers say. "We certainly want to
give our customers a good experience," Frizzell said, "but we also
want to allow ourselves to have additional revenue sources."
With PC sales slipping and the waning economy impacting on both
consumer and corporate spending, a new revenue stream is a welcome
addition for manufacturers.
"Certainly these deals are great for PC manufacturers because
they'll be able to make some money they weren't expecting," said
Michael Silver, an analyst with Gartner Group.
Besides AOL Time Warner, offers to rent space are coming from all
corners of the industry. "Some of the companies are those that
provide portable search engines, instant messaging, back-up
services like digital photography and music," Compaq's Frizzell
said.
The most likely companies to end up on the start-up screen of a new
PC are Internet service providers and others that offer services
under a subscription model, analysts predict.
Meanwhile, Microsoft has remained on the sidelines as Compaq and
others announce new interest in brokering deals with its
competitors. Compaq said that it had received a bid from Microsoft
recently to feature its MSN Internet service access icon on the
desktop - which included a financial arrangement - but turned it
down because the deal with AOL was already in place.
Microsoft has brought to light a clause in its flexibility
agreement that says PC makers must include the MSN access icon if
they make deals with other ISPs. Beyond that, it has handed over
control of the decision to its hardware partners.
"They're just trying to get a product out the door," Silver said.
It hasn't been as easy as Microsoft might have expected. The
company and its new operating system have been the target of
continued criticism from competitors, the government and industry
trade groups. Microsoft also has a lot of money tied up in the
development and marketing of Windows XP, and needs the 25 October
launch to happen without a hitch. Microsoft said it expects to
spend more than $200m (£1.4m) marketing the operating system
worldwide in the first four months, president and chief operating
officer Rick Belluzzo said last week.
"It's almost like they had no choice [of giving PC makers
flexibility]," Silver said. "The more they held their ground, the
more likely they'd have some problems, and they don't want to have
to back out of their plans for the XP launch."