Computer manufacturers can now remove Internet Explorer from the Windows operating system and choose what program icons will be displayed on computer desktops.

In its ruling last month, the court found that Microsoft's licensing agreements with computer manufacturers broke the law, and said Microsoft maintained an illegal monopoly by pushing potential competitors off the computer desktop.

Microsoft's earlier licensing agreements required manufacturers to include Internet Explorer and prohibited them from changing the desktop from a preset collection of icons. Later, the license was changed to allow manufacturers to add icons such as the one for rival Internet browser Netscape Navigator and America Online, a rival to Microsoft's MSN service.

Microsoft had said it wanted a clean desktop, completely free of all icons, for Windows XP, the next version of the Windows operating system.

"Microsoft is moving to correct the problems that the appeals court identified as anti-competitive. They obviously want to move forward and (Wednesday's) announcement is a strong attempt to prevent any delays or actions that might force a delay in the release of their new operating system," Goodfeld said.

Although the U.S. Court of Appeals in Washington spared Microsoft a breakup last month, it also upheld a lower court's finding that the company was a monopoly and that some of its licensing practices were illegal.

Other parts of the case, such as whether Microsoft's practice of tying the browser and other software to Windows was illegal, are to be sent back to a different lower court judge for consideration.

Harvey S. Jacobs, of Jacobs & Associates -- a firm specializing in business and internet law -- said that Microsoft's licensing change is a "pre-emptive strike" mainly directed at the private litigants.

Companies and individuals will have to re-think whether to file a costly antitrust action against Microsoft, given that one of the main requests, less restrictive licensing agreements for XP, has already been conceded by Microsoft, Jacobs said.

"MS opponents were gathering to use the XP launch as further evidence of MS' attempted domination of the applications market via its monopoly over the operating system market, and 'opening up' the desktop MS may be able to silence some of those critics -- in particular lawmakers who often are just looking for the quick and politically expedient fix," Jacobs said.

British lawyer Ian McFarlane said that the licensing change might have been meant to placate members of European Union, which is currently conducting two investigations into MS' alleged monopolization of the operating system market in Europe.

Jacobs said Microsoft's action would not mean much to software competitors.

"XP integrates even more features into the operating system and thus the battle for the desktop is reduced in importance. If video/audio streaming, browsers, e-mail encryption, P3P privacy protocols and the like are integrated into the operating system, what good is an icon link on the desktop to Media Player, AOL, Netscape or Real Audio?"

Microsoft Chief Executive Steve Ballmer said the licensing changes are effective immediately, meaning computer manufacturers can implement the loosened restrictions in their plans for the Windows XP desktop, along with systems shipping presently.

Oddly, Microsoft's official statement on Wednesday's announcement dwelt mostly on the company's plans for its forthcoming release of Windows XP.

According to the statement, PC manufacturers will now have the option to remove "Start" menu entries and icons that provide end users with access to Internet Explorer and can put icons directly onto the Windows desktop.

"Based on extensive customer usability studies, Microsoft had designed Windows XP to ship with a clean desktop and improved Start menu, but PC manufacturers will now have the option of continuing to place icons on the Windows desktop if they want to," the statement read.

Microsoft will also be implementing new "easy remove" options in XP, which will allow users to delete the Web-browsing program, and/or its icons.

Officials for Dell, Gateway and Compaq also offered comments, which were included in Microsoft's statement. Here again, most of the reactions focused on how excited everyone is about XP.

But all the manufacturers did manage to note in their comments that they were looking forward to being able to "customize" their machines' desktops and program lineups for their customers.

Compaq Computer spokesman Arch Currid told an Associated Press reporter that Microsoft already has cooperated in giving Compaq some freedom to structure desktops on its computers.

"We already really have a strong relationship with Microsoft and we felt like we had good flexibility before this decision," Currid said.

Microsoft originally responded to the Appeals Court's ruling on June 28 with a statement expressing approval of the court's decision, saying the company was pleased that the court had overturned most of the lower court's findings against the company, drastically narrowing the case and removing the breakup cloud from the company.

In the statement, the company said: "We recognize that as a successful company, we have an important responsibility under the law and to the broader industry. We take that responsibility very seriously, and we will continue to work hard to provide great opportunity for our industry partners and consumers."

The statement also contained a promise that Microsoft would work toward resolving the remaining issues quickly.