| Where does digital-media fit in at Microsoft? [Analysis] |
Oct. 15, 2002
(Oct. 17) -- UPDATE -- Our sources now tell us that the announcements Microsoft will make at DevCon will not involve digital media. Rather, they will touch more directly upon the embedded arena.
While this certainly means the educated speculation in the story turns out not to have been as educated as we had hoped, we nevertheless feel that the overall discussion of Microsoft's technologies remains valuable. And we do continue to believe they are putting together a digital media strategy. But not for DevCon.
ORIGINAL STORY
(Oct. 13) -- Is Microsoft about to spring an October TV surprise? Could be. Industry sources suggest announcements are due next week at Microsoft's Windows Embedded Developers Conference in Las Vegas, reports our own Alexander Wolfe.
The talk that's circulating in the industry says that Bill Gates & Co. will at that time formally launch a revamped home-entertainment media and digital media strategy. This will encompass current Windows Media technology as well as new takes on its mostly unsuccessful 'Ultimate TV'.
The objective: Realizing Gates's long-held dream of dominating the home-entertainment-center market; a market that's finally coming together via the merger of increasingly computerized consumer electronics with streaming media technologies.
UltimateTV -- a set-top-box (STB) and digital recorder built around Windows CE -- has been an also-ran in the marketplace. Like competitor TiVo, UltimateTV enables viewers to record upcoming programs based on general preferences. But the service has been available only through DirectTV satellite, not cable, greatly limiting its market-penetration possibilities.
More recently, rather than focusing solely on the set top, Microsoft has been subtly unleashing a soup-to-nuts media strategy. This includes not just STBs, but PCs, consumer electronics and streaming-media software technologies.
A strong push in that direction was evident last month when Bill Gates showed up at a Hollywood press conference accompanied by Titanic director James Cameron and Beatles producer George Martin.
Before 1,000 entertainment executives, Gates unveiled the beta release of Windows Media Player 9. More than the release of the player itself, the event was an indication of the high priority Microsoft attaches to its media strategy. "Windows Media 9 is the culmination of years of research and development designed to realize the true potential of digital media on the PC," Gates said in a statement at the time. "We join our partners across the computer, entertainment, and consumer electronics industries to celebrate . . . software that will help power the next wave of digital media."
Along with that software news, Microsoft touted upcoming chip-level hardware that could decode high-definition (1280 x 720) video Windows Media video. Microsoft says that's two and a half times the resolution of a DVD. Texas Instruments will be the first company to demonstrate encoding of Windows Media Video 9 directly on a chip, Microsoft said.
More significantly, Microsoft is hoping to successfully position Windows Media as an alternative -- albeit proprietary -- to MPEG-2. Microsoft claims that Windows Media TV can record in the same quality as MPEG-2 technology while tripling storage capacity.
Perhaps the most telling clue that Microsoft is set to unleash a comprehensive strategy are these words from its Windows Media press release: "These breakthroughs in using Windows Media 9 Series video technology at the chip level will open up new consumer possibilities for next-generation set-top boxes delivering services directly over IP-based networks, new applications for encoding Windows Media Video and new consumer electronics devices."
Thus Microsoft's upcoming announcement could likely encompass CE-based set-top capabilities, Windows Media, and expressions of support from many of the major players in the cable world. The later would help Microsoft move beyond satellite TV.
Many attempts
Indeed, it may well be because UltimateTV was available only through DirectTV satellite that it didn't help Microsoft achieve market domination. From a software standpoint, the important information is that Ultimate TV has a set-top box running Windows CE. And CE is the centerpiece of Microsoft's embedded strategy.
Microsoft has tried for years to apply CE to gain a major foothold in the STB market. But it hasn't had much success.
In 1997, Microsoft made a deal with cable provider Tele-Communications under which TCI would build 5 million TCI digital set-top boxes based on Windows CE. The deal also called for Microsoft to provide a healthy sum to TCI, to the point where some analysts painted the deal as a loss-leader to gain the big CE design win. It's not clear what subsequently happened with the planned boxes.
In 1998, Microsoft took at high-profile stab at home media with its WebTV interactive-television software platform. WebTV coupled Microsoft Network (MSN) Internet content with cable television programming and services. Scientific-Atlanta planned to integrate WebTV Service into its Explorer 2000 set-top boxes. The two companies were also to jointly design a set-top box incorporating CE. In the end. however, WebTV joined numerous other Internet ventures as a victim of the bursting economic bubble of the late 1990s.
UltimateTV, too, had seemed a victim of the contracting satellite TV business. Last January Microsoft said it would disband its Ultimate TV group of 420 employees.
UltimateTV service doesn�t seem to be completely dead yet, however. Several calls placed today to various DirectTV sales departments revealed that few of the company's customer service agents are familiar with the service. One agent reached by WindowsForDevices.com said UltimateTV service was still available, at $10 per month for the TV-recording portion of the service and $30 per month for full Internet access. Another telephone rep said that few people ordered UltimateTV and that "TiVo seems to be the way most people want to go." (However, some analysts now wonder how much staying power TiVo will have.)
What venue?
Exactly where and when Microsoft's upcoming announcement will be made isn't clear, but two things are pretty much certain. First, Microsoft is planning a major 'Ultimate TV' announcement. Microsoft is also planning to make one or more important announcements at its Windows Embedded Developer Conference (DevCon) in Las Vegas Oct. 21 through Oct. 24.
It might seem more appropriate for Microsoft to make such a media-centric announcement in Hollywood, as it did with the Windows Media Player 9. But it's also true that the UltimateTV STB uses CE, and that the OS is the centerpiece of Microsoft's embedded strategy. Put two and two together and it's quite possible Microsoft's upcoming strategic media announcement will take place at DevCon.
So watch our 'HOT STORY' link on our home page for further details.
About the Author: Alexander Wolfe is executive editor and senior analyst of WindowsForDevices.com. He can be reached here.
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