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 center.

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 CNET News.com.

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 realize 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.