In Microsoft's view of the world, its new Windows XP operating system is a great breakthrough -- stable, robust, and full of new features.
But both competitors and industry watchers are concerned about XP's integration with Microsoft's forthcoming Internet service initiatives. Lots of features loaded inside the operating system are intended to capture the emerging Internet service markets for Microsoft in a manner that is anti-competitive, critics say.
"XP has profound implications," said Ken Wasch, president of the Software & Information Association. "Consumer choice will be extinguished even further."
Whatever spin is put on XP's new features, including its ambitious new media player and digital photo package, it's clear Microsoft sees XP as a stepping-stone to the next stage of its business.
"XP is going to be the key operating system for Microsoft as they move forward into their .Net vision," said Michael Cherry, a 10-year veteran of the Windows development team and director of consulting firm Directions on Microsoft.
The .Net initiative is Microsoft's bet-the-farm strategy for its future business, which is shifting the company away from its core software products. That future includes Web services such as content delivery, financial transactions, music, and applications available for any device, anywhere, eventually for a fee.
Technology loaded into Windows XP should help Microsoft realize its vision.
XP is the first operating system to include key elements of Microsoft's .Net strategy, such as .Net My Services, formerly called Hailstorm -- Microsoft's seamless and all-encompassing Web services architecture.
"So now Microsoft has a common operating system across a wide base of devices, all of which hold the plumbing and the foundation work on which they can build the .Net framework and the .Net services," said Rick Belluzzo, president and chief operating officer of Microsoft.
If Microsoft can convert consumers to XP and its built-in services, analysts say online services like America Online should watch out.
Instead of subscribing to an online service like AOL, .Net users could simply sign up for Microsoft's Passport authentication service. Users will be able to sign on once, on any Internet XP device, to access Web services like music downloads, banking, calendars, and office applications.
Microsoft is now doing a hard sell to convince developers to create applications using .Net. Having elements of .Net in XP is part of the pitch to developers, and analysts say more .Net-friendly elements from future Microsoft operating systems should be expected.
Microsoft is already planning its next operating system, code-named Longhorn, which could ship sometime in 2003.
