XP Microsoft's new Windows XP operating system for PCs goes further than ever before in commandeering the capabilities of the most widely used desktop tool in America: the telephone, the New York Times reports.

Noting that the ability to use the personal computer as an "intelligent" phone had been viewed largely as a curiosity by the computer and telecommunications industries and also that Internet telephony was mostly not of high quality, the report said Microsoft's new software was set to exploit the next generation of the Internet, offering computer-based telephony with better-quality voice than before and with more powerful features than the traditional phone. "And that has some high-technology executives wondering whether the telephone companies are going to be the next target in Microsoft's sights," it wrote.

Microsoft is preparing to include both high-quality telephone and directory features in Windows XP, which is scheduled to be commercially available on October 25. Microsoft asserts that it will transform the very nature of the telephone by integrating its improved features such as online video meeting software and Internet voice chat with a more sophisticated version of the company's identity system, known as Passpoprt.

"In the future, not only will Internet telephone calls be of higher quality than today's telephone network, but the personal computer will offer new features like the ability to tell whether the person being called is at the desktop computer before the call is made and 'follow-me' capabilities that let the network track a person's location whether at the desk, at home or reachable by cellular phone," the newspaper said. "One favorite voice and computer capability described by Microsoft's chairman, William H. Gates, is the ability to call a restaurant and have its menu pop up on a computer screen during the call."