Maybe $5,000,000,000 set aside from Microsoft will accelerates the development of broadband.
Microsoft Poised For Major Role In New Industry
Full Coverage
AT&T - MediaOne Deal
By Martin Wolk
SEATTLE (Reuters) - It could be good-bye Wintel, hello WinT&T.
As cable providers led by AT&T Corp. (NYSE:T - news) move aggressively to put increased computing power in television set-top boxes, the dominant computing platform of software giant Microsoft Corp. (Nasdaq:MSFT - news) and its hardware partner Intel Corp. (Nasdaq:INTC - news) may fade in importance.
But with one sweeping deal, Microsoft has forged a wide-ranging alliance with the telecommunications leader that could leave it with a similarly dominant position in the emerging market for high-speed Internet and cable television services, analysts said Thursday.
''There are still some small-scale battles that have to be mopped up, but overall Microsoft looks like it has secured a pretty dominant position in this marketplace, both on the server and client side,'' said Scott McAdams, president of Seattle brokerage McAdams Wright Ragen. ''I think it would be pretty hard for them to lose control going forward.''
AT&T Chairman C. Michael Armstrong himself drew the analogy between the part Microsoft plays in the personal computer industry and its role in the new generation of home entertainment and communication services.
''Just as Microsoft has published APIs (application program interfaces) and had an open environment for their operating system, that will be true in the interactive TV arena of publishing APIs as well,'' he said.
That may be good news for software developers eager to create a new class of games, browsers and other programs that build on the new platform. But it is bad news for Microsoft's rivals and detractors who contend the Redmond, Wash.-based giant has abused its current monopoly position.
Among the losers are Sun Microsystems Inc. (Nasdaq:SUNW - news), which makes set-top box software, and America Online Inc. (NYSE:AOL - news), which was shut out of the multifaceted deals struck by AT&T, MediaOne Group Inc., Comcast Corp. (Nasdaq:CMCSA - news) and Microsoft.
''Sun and AOL are the ones put on the bench,'' said Rob Enderle of Giga Information Group. ''It's clear they don't have the funds or the resources to play at this level.''
Enderle, who coined the term WinT&T, said there was still room for a major hardware company like International Business Machines Corp. (NYSE:IBM - news), Compaq Computer Corp. (NYSE:CPQ - news) or Hewlett-Packard Co. (NYSE:HWP - news) to establish a strong position on the hardware side.
Armstrong stressed the cable industry ''will continue to own and control the architecture'' for set-top boxes and advanced services, and said operating environments would remain open.
But including past agreements Microsoft now has commitments to supply at least 7.5 million to 10 million of the 14 million devices AT&T hopes to deploy over the next several years.
And McAdams noted that Microsoft also has an inside track with No. 4 U.S. cable provider Comcast, in which it holds an 11.5 percent stake, and possibly with No. 2 Time Warner Inc. (NYSE:TWX - news) through their joint investment in the Road Runner high-speed Internet access venture.
Charter Communications, the No. 7 cable provider, is wholly owned by Paul Allen, a Microsoft co-founder, director and second-biggest shareholder, giving the software maker yet another connection.
While sales volumes initially will be small, Microsoft is accomplishing its goal with little risk, winning a 5 percent annual return for its cash and a chance to benefit from any growth in AT&T stock.
''The revenue streams that I think are going to come from this are relatively small and therefore non-material to Microsoft's income statement today, but our experience is that's how you begin to build great businesses,'' said Microsoft chief financial officer Greg Maffei. |
