Microsoft and AOL ink Windows XP pact

America Online and Microsoft have reached a tentative agreement under which the AOL 6.0 client will be bundled into Windows XP, sources close to both companies said late Thursday.

The agreement was due to be reviewed and signed by both parties this week, the sources said. Both AOL spokesman Jim Whitney and Microsoft spokesman Jim Cullinan declined to comment.

The sources said the agreement stipulated that AOL was currently required to deliver AOL 6.0 for Windows XP, known as the Steppenwolf client, by mid-July. As such, it was sending a team of developers and other staff to the Redmond campus for several weeks to work on integration issues around the bundling, followed by another visit to test application compatibility.

This was necessary to ensure that Steppenwolf met Microsoft's internal deadlines and did not delay the official global launch of Windows XP on 25 October.

The five-year contract between the two companies that guaranteed AOL prominent placing on Microsoft's Windows operating system in exchange for exclusive support for Internet Explorer on AOL's online service expired in January.

AOL was widely expected not to renew the deal, particularly given its acquisition of a competing browser through its purchase of Netscape Communications in 1999. Microsoft and AOL have also repeatedly clashed in their rivalry over instant messaging.

News of the latest agreement first surfaced on the BetaNews.com Web site. One of the issues currently facing AOL is the fact that the English language bundling of its client on XP requires about 84MB, with another 42MB if the Compuserve online service is added. Microsoft has apparently informed AOL that there is only 70MB left on the XP CD.

As such, AOL is considering an improved single installer that would detect and install the required country resources at install time, allowing a single installer for multiple countries. It is also looking at what could be removed from the bundled client to reduce its size.

AOL is also working on getting Steppenwolf compliant with the XP Logo specifications, a source said, adding that six issues were currently being addressed, including the client installation directory and the shared components installation directory.

But Steppenwolf will apparently not include Komodo, AOL's new software currently in alpha testing and which is designed to allow the embedding of third-party Windows-based browsers into the AOL consumer browser, the sources said.

AOL and Microsoft are also discussing the possible integration of the Windows Media Player, but any agreement will have to comply with AOL's current exclusivity agreement with RealNetworks around its RealPlayer, which ends in mid-July,

While AOL has not ruled out making the Windows Media Player its exclusive player, it is concerned about supporting it on other platforms and in older versions of Windows that have not shipped with a compatible player, the sources said.

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