The ruling to unbundled the Windows Media Player from Windows and to improve server interoperability with competitive server products has little near term impact on Microsoft. The server component is largely redundant to the US DOJ decision already in place and the Windows Media Player is both widely downloaded in its most current form and, as a free option, unlikely to be intentionally avoided by PC OEMs who don’t have competing offerings. If the user is connected to the internet it is hard to find a scenario where they wouldn’t have downloaded it for free anyway if they didn’t have it, and given the success of Musicmatch and iTunes people don’t have to use it today if they don’t want to.

The long term problem for Microsoft is the increased introduction of government oversight and direction into their development process. This could block them from adding additional features to the product in the future and some of these, like virus checking and anti-spyware, could be critical to the continued reliability and security of the product.

One counter strategy is to rethink Windows in the Internet Age and only provide the basic core operating system to the OEMs, then provide a feature bundle to those who register their product to combat pirates and to provide a potentially better initial Windows experience (the bundled features are generally out of date when the end user receives the product). This could also be done in conjunction with the OEMs to create a more differentiated product as well. Corporate needs could be addressed as well as corporations often don’t want entertainment features to be in the products that are given to employees.

The basic delivery model for Windows has not changed significantly since its inception and maybe this ruling provides an opportunity to see if there is a better way. Regardless, Microsoft’s challenge is to find a way out of this before they become a regulated utility where few of the current key employees will want to work.