Microsoft may pressure PC makers to exclude AOL

USA Today

Failed talks between America Online and Microsoft will put more pressure on troubled personal-computer makers who are caught in the battle between the two giants.

PC makers declined comment on the impact of the collapsed talks, in which AOL sought to be included in Microsoft's upcoming Windows XP operating system.

But industry pros warn that Microsoft, given its history of bullying PC firms, could pressure PC makers to exclude AOL from the desktop — leaving only Microsoft's competing products. Microsoft's software runs on 92 percent of PCs, leaving PC makers with little clout.

"It's clearly a huge disadvantage to PC makers," says Ed Black, of the Computer and Communications Industry Association.

Analysts also say PC makers and AOL will cut more deals to ward off Microsoft. In one such deal signed two years ago between Gateway and AOL, Gateway PC buyers get preinstalled AOL software and free year's subscription.

In recent months, many leading PC giants have fought Microsoft over desktop space on Windows XP.

Computer executives are angry that early versions of Windows XP, show a blank opening screen with no icons and links to their Internet products and services.

Microsoft says the blank screen is designed to clear the desktop of clutter. Critics charge it is another power play by Microsoft to control the desktop. Without icons to other services, users will be more inclined to use the Microsoft services, they say.

Windows screens often are called the most valuable "real estate" in the PC world.

"It's a battle for control of the user's experience, and clearly, it's a war Microsoft feels it must win," says analyst Chris LeTocq of Guernesey Research.