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As Vista arrives, competitors reply

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Microsoft

For Microsoft's challengers, with everything to gain and little to lose, optimism reigns. Software makers are doing what they can in the marketplace to stay a step ahead of Microsoft's ability to bundle more and more features with its operating systems.

Microsoft is under attack from many quarters, and the Tesco announcement is another sign of that," said Roger Fulton, an analyst at Gartner in London. "But Microsoft has 98 percent loyalty at the moment, and business customers, who still account for the majority of all software purchases, have a hard time changing their habits. That means the giants will die slowly."

Still, Fulton said Microsoft was facing a series of challenges far more serious than the European Commission's ongoing scrutiny of its all-or-nothing Windows software package.

The biggest threat, Fulton said, is from Google, the U.S.-based search engine that is starting to give away comparable office software through Web- based services. Google announced last week that it was releasing online, at no charge, a package of word processing and spreadsheet programs called Docs & Spreadsheets.

"The Internet has created so much opportunity for new disruptive businesses to emerge and changed entirely the way a market functions," Fulton said. "Microsoft is having to respond to this threat."

While large retailers in France and Germany are not stocking discount software next to the vegetables, they are beginning to push lower-cost Microsoft alternatives in their specialty stores.

In France, consumers can buy a desktop computer with the Linux operating system instead of Windows, an 80- gigabyte hard drive and a 2.2-megahertz processor from the French manufacturer Décimal Informatique for just €249, or $310. The PC is being sold through the online retailer www.boostore.com, a unit of the French retailer Carrefour.

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