Excellent summary, Larry. I would go further on one point:

One advantage of having this capability bundled with the OS is that the application programmers know the end users will have certain functionalities on their computers. For example, I've used the MAPI (mail API) interface in some of my programs. I don't have to wonder what kind of email program the user system might have installed. Other capabilities like DAO, ADO, ODBC, etc. also come in useful in my programs.

What the competitors and the government called "bundling IE with the OS" actually involved including the HTML display engine, "MSHTML", as an OS component just like DAO/ADO/ODBC--the latter acronyms are all about database support, and MSHTML is about displaying HTML in a window. Just another service.

IE is just a shell around the MSHTML component, and programmers can use MSHTML in other ways. I've seen some beautiful standalone apps that used MSHTML to create a user interface with all the strengths (and a few of the weaknesses) of a Web page. Other apps use it to include a built-in browser, for example as a viewer in a file management utility. All in all, "bundling" MSHTML is beneficial for everybody, except a few sore losers like Netscape. I think that if there hadn't been such a fuss over it, more programmers would have moved up to DHTML interfaces in their apps; as it is, the lawsuits clearly served to hold back technical progress, and the users were the clear losers.

I think Apple did more than anyone else to begin blurring the definition of an OS. Up until the Mac, a PC consisted of hardware + BIOS + DOS, and didn't really do anything without additional software (hell, I'm such an old fart I remember the days when I had to customize my own BIOS to install CP/M). Apple came up with the radical notion that a computer should be a full-featured "appliance" that could actually be useful from the moment you set it up, and Microsoft eventually jumped on that bandwagon. So what's an OS, really, these days? I'd call it a suite of software that provides minimal functionality as required by today's consumer. PCs would never have graduated beyond hobbyist toys if Apple and Microsoft hadn't grown their OSes into mature software suites that made computers useful right out of the box.

--Robert