Pirate copies already circulating

"In reality all it is offering to users is a better and more integrated way to do what they do now," said Brian Gammage, principal analyst at research firm Gartner.

Making it easier to manipulate images or create CDs is important if the PC was to assume a more active role in homes, he said.

Before XP doing many of these things involved third-party software. Now Microsoft has muscled in. The only thing it leaves to others is software to create MP3s audio files.

Active anti-piracy effort

Also ushered in with XP is the need to activate the software. Anyone upgrading to XP will have to get in touch with Microsoft and receive an activation number that will let them use the software indefinitely.

To get the number users will have to share information about the configuration of their machine. If you change too many parts inside your PC, you may have to get in touch with Microsoft and reactivate XP.

There is no guarantee that consumers will like this.

"Europeans are very reticent about sharing that type of private information," said Mr Gammage.

"Microsoft will have to tread very carefully because it has not had the best of presses of looking after consumer interests over the last few years."

Microsoft is selling this as an anti-piracy measure, but there are other reasons for doing it too. It begins the process of making people think of their software as a service rather than something they just buy and use.

This is where the rest of the Microsoft strategy starts to become more obvious.

When XP is installed on an older computer or first run on a new one, it exhorts people to sign up for a Microsoft Passport account and for its MSN internet service.

Without a Passport account consumers will not be able to use many of the internet-based services that Microsoft is backing. Some will be launched with XP, others will come later.

Bitter rivals

Microsoft hopes that the Passport system will become ubiquitous and the preferred method people use to identify themselves to a wide range of connected devices including smartphones, set-top boxes, and perhaps consoles used to play online games.

Under its .Net banner Microsoft is also selling the technology that will sit behind the scenes and tie your online life into a seamless whole.

Ultimately Microsoft wants to become a company that makes its money from services and subscriptions rather than just relentless upgrades to its software. XP is just the start of this big change.

But there are no guarantees that it will work. On almost every front of its grand strategy Microsoft faces stiff competition. There are rival technologies for almost everything it wants to do.

There are competitors who resent its efforts to reach beyond desktop computers to embrace the net.

And governments in the US and Europe are keeping an eye on Microsoft, wary that it might again try to use its might to muscle out the competition.