For smaller competitors, however, Microsoft's decision to bundle technology into Windows can be devastating. As an extreme example, Microsoft's decision to bundle its Web browser with Windows in 1996 is credited with helping Microsoft win the browser war against Netscape Communications' Navigator and has been a key issue in the antitrust case that is awaiting a decision by a federal Court of Appeals. When the company included data-compression software into its DOS operating system in 1993, it triggered a legal battle with Stac Electronics, then the market leader in compression software, over patent infringement. From another perspective, some of the new features In Windows XP are so inferior to third-party products that they pose no threat at all, say analysts and software developers. Windows Media Player, for example, relies on third-party products to fully function and so doesn't necessarily work the way Microsoft promises without them.
Some software companies say that being included in the operating system actually boosts sales.
The first category is easily defined and has more to do with hardware makers than with those developing software, analysts say. By adding moviemaking and photo-editing features, for example, Microsoft could help digital camera and camcorder sales. Support for wireless could be boon for 802.11B wireless networking. But other features, such as the inclusion of a personal firewall or broadband sharing, could hurt some companies selling routers used for home networking and cable connections, Gillett said. Sofer said that adding moviemaking capabilities to Windows Me was viewed by MGI as a good thing.