MSFT is not completely asleep...
msnbc.com
<<Is WebTV on the verge of some major new cable deals? With the year's biggest cable-industry convention about to start in Chicago, industry sources tell MSNBC that the Microsoft unit may be close to announcing some break-through arrangements. Among the rumored potential partners: Comcast Corp., Charter Communications and Rogers Communications.
“THERE WILL BE an announcement about deals with cable companies,” says one communications-industry executive familiar with the situation.
But it wasn't clear to this executive and others interviewed what the financial or numerical terms of any deal might be. Indeed, even the timing of a WebTV announcement and the number of cable companies involved wasn't certain.
WebTV declined to discuss its plans for next week at the National Cable Television Association's Cable '99 convention, as well as the status of its far-ranging conversations with cable operators over deploying its Internet-over-TV technology in set-top boxes.
“We don't have any information to share on any of those companies,” a WebTV spokeswoman says. “If any deals do happen, next week would probably be a good time, but we don't have any information we can share at this point.” Comcast, when contacted, didn't return a phone call seeking comment. Charter declined to comment. A Rogers spokeswoman couldn't be reached.
However, one individual familiar with the WebTV-Charter discussions suggested that the two parties were still significantly apart despite intensive negotiations.
In some cases, the WebTV deployments could involve a full service roll-out. Other cases involve more limited market tests. Likewise, some negotiations involve inserting WebTV components into other makers' set-tops, while others involve using the WebTV box in its entirety.
Ever since Microsoft spent some $425 million to acquire WebTV in 1997, the company has been working to extend its distribution well beyond the retail channel where all of the roughly 800,000 WebTV boxes now in use have been sold to customers individually. Most of the effort has been aimed at cable operators, whose most up-to-date customers have set-top boxes in their homes.
Satellite, another industry with millions of TV customers, has served as another area of focus for WebTV business development. In January, it solidified a deal for putting WebTV services on the set-tops of EchoStar Communications.
Today, cable set-tops function mostly as channel de-scramblers and pay-per-view ordering devices. But increasingly sophisticated set-tops are expected to bring additional services to the TV set, including e-mail, Web browsing, electronic commerce, telephony and more.
Microsoft and WebTV are aiming to provide the primary platform for those services, but they have been largely stymied in their efforts to gain acceptance in the cable industry. Part of the problem, analysts say, is fear of Microsoft dominating the set-top as it does the personal computer. Another factor: cable simply tends to move slowly in adding new services.
But the AT&T purchase of TCI then MediaOne may be accelerating the timetable, industry executives admit. And increasingly, investors and customers expect a greater number of communications options from their cable vendors, analysts say.
Not that WebTV is the only option for such services. Far from it. Such companies as OpenTV (which deploys hundreds of thousands of interactive set-tops worldwide), WorldGate Communications and Liberate Technologies (formerly Network Computer Inc.) also offer interactive services over television.
One high-ranking executive with a major set-top box manufacturer says he has believed that a Comcast-WebTV deal is a foregone conclusion, and that an announcement this coming week wouldn't surprise him. Microsoft spent $1 billion to purchase about 11 percent of Comcast in 1997.>>
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