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By Michael Kanellos, 8 May 2003 13:48

NEWS Microsoft plans to retool its Windows XP operating system so that two people can run applications on the same machine concurrently, an important step toward the company's goal of transforming the PC into a home entertainment centre. Service Pack 2 of Windows XP, coming later this year, will let one person manipulate applications via the keyboard while another person views pictures or surfs the internet on the same computer via a smart display, Megan Kidd, product manager for Windows Powered Smart Displays at Microsoft, told silicon's sister site CNET News.com. A smart display, which Microsoft developed under the code name Mira, is typically a 10-inch or 15-inch detachable monitor running Microsoft's Windows CE for Smart Displays operating system. They do not contain hard drives and do not connect directly to the internet. Instead, they funnel requests to, and receive data from, a base station PC running Windows XP. Once detached, the smart display connects back to the PC using 802.11 wireless networking for accessing email, surfing the web or reading documents. A stylus, rather than a keyboard, is used to input data. The lack of concurrent usage has been one of the chief complaints about smart displays. The additions to Windows XP could make the devices more palatable to consumers. So far, sales of smart displays have been slow since their debut in January, according to various retail analysts. "We realise the benefits to customers in being able to access content on the host PC from both the computer and the smart display in a concurrent fashion," Kidd said. "We are working to address this." A new batch of smart displays is expected to debut around October, according to sources. More importantly for Microsoft, the capability for simultaneous use could have a greater impact over time on the company's overall strategy to wed the home computer to electronic entertainment devices. The company is trying to encourage consumers to think of their PC as a vault for pictures, TV programmes and music. And without offering concurrent usage, Microsoft could unleash a tidal wave of domestic nitpicking over who has application primacy - mum, dad or the kids - at any given moment. On Wednesday at the Windows Hardware Engineering Conference (WinHEC) in New Orleans, Microsoft showed off a prototype of a set-top box co-designed with graphics chipmaker ATI Technologies that lets consumers view on a wide-screen TV their media files stored on a PC. The set-top box ran Windows CE.Net 4.2, the same basic OS inside a smart display. Concurrent usage with a set-top box would probably prevent the PC from becoming a digital video recorder (DVR) or a photo album for the TV. With the set-top box functioning in this manner, consumers could use their PCs like a DVD player or DVR without actually moving their bulky computers to the living room. Simultaneous use policies, contained in software licenses, would also prevent the PC from evolving into a storage device. One of the major problems the industry has faced over the past few years has been a creeping sense of similarity. All PCs perform the same function. As a result, consumers and manufacturers have gravitated toward the least expensive ones, analysts have said. "We’ve squeezed out the investment opportunity at the high end," Will Poole, senior vice president of Windows clients at Microsoft said during a speech at WinHEC this week. "People look at a $1,000 PC and say, 'Hey, this is good, really good.'" The ability of PCs to become central to home entertainment "will keep (PC) prices from eroding too dramatically," said Jen-Hsun Huang, CEO of graphics chipmaker Nvidia, who also spoke at WinHEC. "We are going to expand our industry footprint to encompass a large market that we are not in today." Michael Kanellos writes for News.com