"We can't let uncle Bill have his way all the time now, can we David?"
Maybe not, but.....
Microsoft's Gates Pitches a New Type Of TV Set-Top Box to Cable Executives
By Don Clark Staff Reporter of The Wall Street Journal
The Wall Street Journal via Dow Jones
Microsoft Corp. Chairman Bill Gates met with top cable executives in New York yesterday to pitch a new type of television set-top box, the software giant's latest effort in a long-running crusade to build a franchise in consumers' living rooms.
Microsoft is proposing a design for a digital device that would connect to TV sets and cable systems to provide a variety of interactive programming, people familiar with the situation said. The system is based around software called Windows CE, a compact operating system that Microsoft is using in handheld computers and several consumer electronics devices.
Mr. Gates and other Microsoft executives gave demonstrations at Time Warner Inc.'s offices to executives that include John Malone, chairman of Tele-Communications Inc.; James Robbins, chief executive officer of Cox Communications Inc.; Edward Rogers, chief executive of Rogers Communications Inc.; and Brian Roberts, president of Comcast Corp. The cable executives are on the executive committee of the industry-research consortium Cable Labs, whose spokesman confirmed that the meeting took place.
Though no agreement is imminent, the Microsoft proposal marks an acceleration of a broad campaign to create a software standard in TV akin to its control over operating systems used in most personal computers. Microsoft, which last month agreed to invest $1 billion in Comcast, has been trying for four years to cut deals to get its software into set-top boxes to deliver interactive programming. One collaborative effort with TCI and Time-Warner, dubbed Cablesoft, was scrubbed before it was formally announced amid industry concerns about Microsoft's influence over TV standards.
Microsoft declined to discuss the specifics of its proposal. But people familiar with the matter say that the company is attempting to provide technology that could bring some interactive programming to conventional cable systems now but would also provide much more advanced services once those systems are upgraded to accept the kinds of digital-television signals that broadcasters are considering. Microsoft, Intel Corp. and Compaq Computer Corp. have been trying to influence technical standards for digital TV, so far with little to show for their lobbying.
Rick Doherty, director of Envisioneering Group Inc., a Seaford, N.Y., consulting firm, expects Microsoft's design to include technology that allows conventional analog cable systems to provide some digital services, either overlaid on existing television programs or on unused channels on the TV dial. The technology carries information in spaces between frames of conventional video signals, relying on existing techniques as well as an unusual approach protected by a patent that Microsoft has licensed, he said.
The proposed box design also is expected to include a cable modem, similar to the devices that allow PCs connected to some cable services to communicate with the Internet at high speed. Such capability, which would require upgraded technology at cable companies' central offices, would allow full two-way interactive programming.
Mr. Doherty estimated the device could be assembled for a wholesale cost of less than $200, though other estimates have put the figure closer to $300. Either way, the proposed device would represent a savings over early-generation digital decoders, which now cost about $400 excluding a cable modem, which now separately cost $200 to $300.
Microsoft isn't expected to make the hardware itself, relying instead on existing makers of set-top boxes, assuming cable operators indicate demand for the product. A spokesman for Chicago-based General Instrument Corp., which makes conventional and digital set-top boxes, noted that its system should be compatible with Microsoft's Windows CE.
The business model behind the new box may be equally radical. Since cable companies are strapped for cash, Microsoft is expected to negotiate for a share of subscription fees for new services, rather than simply a royalty on selling software for the new devices.
Microsoft, for example, could get monthly fees for new interactive TV guides or information services that now are available through the Microsoft Network, its on-line service, Mr. Doherty noted. The company also is betting heavily on selling software for cable companies' central offices to administer new services.
It's far from clear that cable executives will agree to a deal, mindful of how Microsoft attained its sway over the PC business. Those at the meeting were unavailable for comment yesterday.
Microsoft also faces competition. Navio, a Netscape Communications Corp. spinoff recently purchased by Oracle Corp., has also made presentations to the cable companies and the Cable Labs organization. Other companies selling technology for interactive programming over conventional cable systems include Wink Communications Inc., an Alameda, Calif.-based start-up that recently signed deals with TCI and NBC. |
