Microsoft has bowed to consumer pressure and pulled back from a controversial plan that would have encrypted TV shows recorded on forthcoming digital media PCs. Hewlett-Packard is the exclusive U.S. distributor for the new PCs, which run Windows XP Media Center Edition, a variation on Microsoft's flagship Windows operating system. One of the most compelling features would allow consumers to record TV shows to the computer's hard drive. Known as a digital video recorder (DVR), the feature also would allow consumers to stop live-action TV for instant replays or to schedule recording of shows ahead of time.

But Microsoft chose to copy-protect recorded programming, meaning that it would be viewable only on the one computer. Microsoft claimed that the importance of placating Hollywood about pirated content justified the restriction, even though "fair use" laws give consumers greater freedom in copying shows onto VHS tapes for personal use. The decision also put HP at a competitive disadvantage to Sony, which sells Vaio consumer PCs that can record shows that can be copied to CDs and DVDs or distributed across a home network.