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Microsoft launches XP
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October 25, 2001: 12:59 p.m. ET
Software maker begins marketing its newest operating system.
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NEW YORK (CNNmoney) - Calling it a "key element" in the recovery of the high-tech industry and the economy in general, Microsoft on Thursday officially introduced its newest operating system software, called Windows XP, and kicked off what is expected to be its most aggressive marketing campaign to date.
The widely-anticipated and controversial new software has been available pre-installed on new personal computers for several weeks. Thursday marked the first time it became available in stores for people to install on their current PCs.
Microsoft was celebrating the launch Thursday with elaborate events in New York and London. Meanwhile, smaller launches are taking place this week at other cities throughout the world.
In all, Microsoft is expected to spend more than $200 million marketing the product in the first four months alone.
Participants in the flagging PC industry have looked to Windows XP as a potential catalyst for sales. It includes enhanced Internet and multimedia features that they hope will give consumers a compelling reason to buy a new PC.
Microsoft chairman Bill Gates said Windows XP's benefits would likely stretch beyond just the technology industry.
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Microsoft Chairman Bill Gates talks with CNN's Paula Zahn about the challenge of launching a new product.
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"This is a key element of the technology industry getting re-energized and putting productivity back into other sectors of the economy that can get the economy back to where it was a couple of years ago," Gates told CNN Thursday.
"Whether it's real-time communications, the speed or the consumer scenarios like photos and music, we're creating a platform that not only has what we're calling new experiences built in, but creates overall opportunity for third parties," Gates said.
The consumer version of Windows XP is on sale at retail stores in the United States priced at $199 for the full version, to be installed on PCs that do not have Windows 98 or Windows Millennium Edition. Users that have Windows 98 or Windows ME can buy an upgrade package for $99.
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Most industry observers agree that the release of Windows XP and Microsoft's aggressive marketing campaign could spark some interest in the PC platform. However, few are looking at the new operating system as the savior of the PC industry.
The launch of Windows 95 six years ago was followed by a rise in computer sales, and the industry hopes Windows XP will have a similar effect, reversing the 11.3 percent slump in world computer sales since September 11.
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Windows XP incorporates features such as instant messaging, streaming media and digital imaging capabilities into the operating system. By doing so, Microsoft says it is bringing together all of its innovations in a way that benefits the consumer.
But Microsoft's industry rivals, as well as some government officials, contend that Windows XP is further evidence that the software company, which was deemed an illegal monopolist by a federal judge, continues to engage in anticompetitive business practices.
Because such features are available separately from a variety of vendors, they argue that by including them in Windows XP, Microsoft is using its dominant position in PC operating systems to crush competition elsewhere.
Windows XP also has brought to the fore the long-standing criticism of Microsoft that its operating system software promotes many of its own services and partners - including the MSN Internet service and its Media Player software - thus excluding rivals and curbing consumer choice.
Click here for the latest on Microsoft's antitrust woes
At the same time that Microsoft was celebrating the launch of Windows XP, some of its opponents were gearing up for a continued fight. Some of the 18 states that joined the U.S. Justice Department in suing Microsoft are expected to announce that they have hired prominent Washington trial lawyer Brendan Sullivan to help turn up the heat on the software maker, according to a report in Thursday's Wall Street Journal.
The U.S. district court judge overseeing the current phase of the antitrust trial has ordered Microsoft and the Justice Department into settlement talks, with a deadline of Nov. 2. Some of the state attorneys general have indicated they want Microsoft to modify Windows XP.
Gates told CNN Thursday he is hopeful that the two sides will be able to come to some sort of a settlement.
"We've always said that settlement is probably the best outcome here in the sense of government resources not continuing to be spent and having Microsoft focus in on things like getting new products out," he said. "I wouldn't assign odds, but we're putting our best energy in and we hope that a settlement is achieved."
Shares of Microsoft were trading more than 2 percent lower on the Nasdaq in the early afternoon Thursday amid a broader downturn in software stocks and the technology sector in general. 
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