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Microsoft Changes the Channel on Interactive TV Plan to send Internet content to your television has taken many detours. Marc Ferranti and John Blau, IDG News Service Friday, February 21, 2003 « Previous Page 1 2 Next »
After spending billions
of dollars and the better part of a decade trying to make inroads in the
high-stakes world of television, Microsoft is changing the channel on its plan
to connect TVs to the Internet and push software into consumers' living
rooms.
The new focus is on delivering interactive digital TV
applications that financially troubled cable companies can both afford and
easily use to differentiate themselves from satellite companies offering rival
digital services, while at the same time supporting Microsoft's long-term
strategy of becoming the premier content gateway to the home.
New
TV Tools
Though Microsoft TV Advanced software--designed for a new
generation of set-top TV boxes that never made it to market--has failed to
capture any big customers, Microsoft is putting the finishing touches on new
software for the installed base of "thin-client" set-top boxes that have been
deployed by cable companies.
The Interactive Program Guide,
released last year and designed to make it easier for TV watchers to find shows
and customize their viewing, was the first shot in a salvo of new software from
the company's Microsoft TV unit. New services are slated to undergo trials and
to be unveiled late in the second quarter, according to cable industry
executives and sources briefed by Microsoft.
Upcoming software, to be
incorporated into the Microsoft TV thin-client platform with IPG, is designed
to enable operators to offer features such as multiplayer trivia games and
local-content management of instant information services for local news,
sports, and weather, according to sources familiar with Microsoft's plans.
Making a Change
The new product line represents a change
in direction for Microsoft. For all its R&D, marketing might, and the
approximately $10 billion spent on stakes in cable companies, the Microsoft TV
product family has been bested in the market for cable television software by
rivals with far fewer resources.
Now, bowing to market reality, a
humbled Microsoft is trying again. Microsoft TV software will be tested by
cable giant Comcast in the second quarter, in addition to software from
financially ailing rival Liberate Technologies, according to cable company
executives.
"If Microsoft succeeded in a deal with a big company like
Comcast, it would send shock waves through the industry," says Jim Brancheau,
an analyst with Gartner. Such a deal would signal that Microsoft's perseverance
has started to pay off, Brancheau says.
Microsoft went on an investment
spree in the late 1990s, snapping up $5 billion worth of AT&T and $1
billion in Comcast, as well as varying amounts in companies outside the United
States.
Obstacles to Overcome
Microsoft got a black
eye when reports surfaced in 2000 that it could not meet timetables for
delivery of set-top box software to AT&T. Economic pressures later forced
AT&T to scrap plans for advanced interactive TV services.
Last
year, Microsoft's stake in AT&T went to Comcast when Comcast acquired
AT&T Broadband. As part of that transaction, Comcast, which has more than 6
million digital TV subscribers, made a deal to put Microsoft software on a
trial run this year.
In the United States, Microsoft's other TV-related
initiatives include Ultimate TV, a service for DirecTV satellite subscribers
that lets them play digitally recorded programs at any time, and
MSNTV
services (formerly called WebTV), which lets TV viewers access
the Internet. However, Microsoft last year drastically scaled back R&D for
UltimateTV. MSNTV, though it reaches about 1 million users, is not expected to
grow very fast.
"Why buy a special box for Net access on a low-res TV
monitor when you can go get an Emachines computer for $300 to surf the Web?"
notes Greg Ireland, an analyst with market researcher IDC in Framingham,
Massachusetts.
Related Topics: Desktop PCs, Systems, Home Media Center
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