Microsoft made it official Monday: It has no plans to appeal the antitrust sanctions levied against it by the European Commission. As a result, a stripped-down version of Windows, minus Windows Media Player and related files, is moving forward rapidly.

At least some PC makers had an inkling about Microsoft's intentions not to appeal as of last Wednesday. That's when Microsoft delivered to them the version of Windows ordered by the European Commission that Microsoft is currently calling "Windows XP Reduced Media Edition."

A Microsoft spokesperson confirmed that Microsoft made available o PC makers both Home and Professional flavors of Windows XP that do not include Windows Media Player on January 19. PC makers will be allowed to sell these versions of Windows in European Union countries only. The retail prices of the stripped-down versions will be the same as that of their full Windows XP counterparts.

"These versions will be available to the retail chain in the coming weeks and are already available for OEMs to license. It's the retailers and the OEMs who will decide whether or not to distribute these versions of Windows and when they would make them available," a Microsoft spokesperson said.

"Our proposed name (for this release) has been 'Windows XP Reduced Media Edition.' This name and other issues are subject to Commission review and approval," the spokesperson added.

It's not just Windows Media Player itself that Microsoft has exorcised from Reduced Media Edition. The Redmond software vendor cut out a total of 186 multimedia-related files, a spokesperson confirmed.

"Some common customer scenarios, such as playing an audio CD, playing an MP3 file, transferring an MP3 file to a portable music player, or streaming audio and video over the Internet, will not work unless additional software is installed either from Microsoft or a third party," the Microsoft spokesperson said, specified in the European Commission Decision.

Who would want a version of Windows missing these capabilities? Good question.

"On the business side, the short-term damage (to Microsoft) from the sanctions is likely to be quite limited," said Matt Rosoff, an analyst with the Kirkland, Wash.-based research outfit Directions on Microsoft

"The revenue impact of shipping Windows XP Reduced Media Edition is neutral," since it will cost the same as the full-fledged release, Rosoff noted. "But that's assuming that any OEMs choose to ship it, which I think it pretty unlikely — OEMs tend to like to use as few disk images as possible to keep costs down, and are rightly worried about support calls. The exception of course would be if a digital media competitor like RealNetworks signed a marketing deal with a particular OEM in Europe, but so far I haven't heard word of any such deals."

Microsoft is looking ahead, not back, company officials emphasized.

"Rather than seeking to suspend the Commission's remedies, Microsoft's focus now is on working constructively with the Commission on their full and prompt implementation," said company officials in a prepared statement.

Besides making the Reduced Media Edition available to PC makers, Microsoft also was required to make licensing information for communications protocols available to interested parties. Microsoft published this information to its Web site in December.

Microsoft is still planning to continue with its appeal of the European Commission's decision, however. There is not yet a date for the hearing on Microsoft's appeal.

"Microsoft has been trying (honestly, I think) to portray itself as more cooperative on legal matters. Appealing this would not have helped," Directions on Microsoft analyst Rosoff said. But "Microsoft will continue to appeal the EC's original verdict because of the precedent it sets: Microsoft doesn't want a government body to be able to dictate its product design.

"I don't think today's decision will have much impact on Microsoft, customers, or partners, with the possible exception of leaving an opening for a digital media competitor to gain some traction in Europe at Microsoft's expense--but only if they sign an agreement with an OEM," Rosoff concluded.