HP's 'End Run' Around Windows

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"Apple is a huge motivating factor," this person says. "You don't build loyalty by making a box that's practically identical to your competitors'."

But HP needs to walk a fine line in creating an identity for its products that doesn't directly involve Windows—while trying not to alienate Microsoft, whose marketing muscle and access to technical details are critical. "Nobody's ever done anything like this before," says the advisor. "It's a big risk, and the return is so far not certain."

According to McKinney, Wee's group has taken charge of HP's TouchSmart PCs, which overlay special software on top of Windows Vista (BusinessWeek, 6/25/08), letting users tap and drag on-screen icons to launch programs.

How Far to Take Linux?

The division is also looking for ways to expand application of the company's QuickPlay technology, which lets users quickly boot up their machines with Linux, without waiting for Vista to start. There's also interest in providing methods to watch TV, movies, and other media beyond the Media Center versions of Vista that Microsoft sells. Wee was a designer of some of the software underlying HP's room-sized Halo videoconferencing system, and her team is exploring how concepts from that product could be applied in a broader manner.

A decision by HP to create its own consumer-friendly version of Linux would be a break with current strategy. HP, Dell (DELL), and other PC makers already offer customers an option to buy desktops and notebooks with Linux preinstalled. But those machines account for a small percentage of sales, and PC makers don't heavily promote them.

HP could package Linux with the tools needed to work with HP's printers, digital cameras, and other add-on hardware, backed by the company's marketing and technical support. Yet further embracing Linux could also leave the company's innovations open to copying, due to Linux's open-source licensing terms.

HP's efforts to make Vista more user-friendly come as Microsoft launches a new ad campaign for Windows designed to shore up Vista's reputation, which has been bruised by early technical problems and a withering ad campaign by Apple. The ads, created by hip Miami ad shop Crispin Porter & Bogusky, will star Jerry Seinfeld and Bill Gates. A Microsoft spokesman declined to comment on HP's plans.

Dell and Intel, Too

Yet Microsoft's power to control how PC makers alter the experience customers have with Windows has been diminished. Its 2001 antitrust settlement with the federal government placed restrictions on its ability to prevent vendors from installing their own software on top of Windows, or changing the desktop. And the disappointing response to Vista has prompted Microsoft to grant partners more leeway to alter Windows' look and feel, analysts say. Dell's latest Studio notebooks, for example, feature an Apple-like piece of software called the Dell Dock that groups Vista shortcuts into icons for such common tasks as digital photography, e-mail, and Web browsing.

Longtime Microsoft allies are making wider use of Linux in their products as well. Dell's new ultraportable Inspiron Mini 9 notebook, announced Sept. 4, gives customers the option of running Linux, and Dell may use the operating system in future digital music players, according to a person with knowledge of Dell's plans. Later this year, Dell plans to start selling business laptops equipped with a special low-power chip and an embedded version of Linux that let users bypass Vista to quickly read e-mail, view their calendars, and browse the Web when they flip open their screens. "This is what my customers want," says Dell senior vice-president Jeff Clarke.

Even Intel (INTC), the world's largest chip vendor and a staunch Microsoft ally for decades, is promoting Linux for a new class of ultraportable machines such as the Dell Mini, which uses its Atom processor, just when Microsoft is trying to spread Windows' influence to more portable devices. In August, Intel acquired London Linux developer OpenedHand to work on software for Atom devices. Too many defections could hurt Microsoft economically, since the company collects about $70 for each copy of Windows that PC makers preinstall on their machines.

"It's an end run around Windows," says Rob Enderle, president of consultancy Enderle Group, about the efforts. "For both Dell and HP, there was a realization that Windows became an impediment, especially compared to Apple," he says. "The vendors are taking back some of the user experience."

Add that to the growing list of repairs on Microsoft's Windows checklist.

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Ricadela is a writer for BusinessWeek.com in Silicon Valley.