WebTV expands recording, connection options
Dear Santa, I'm hoping and wishing for CUBE inside!!!!
By Stephanie Miles
Staff Writer, CNET News.com
October 22, 1999, 12:45 p.m. PT
Microsoft's WebTV, originally conceived as an inexpensive and simple way to
access the Internet via the TV, is reinventing itself as the next-generation answer
to the VCR.
Upcoming WebTV boxes will feature expanded digital video recording, sources say, similar
to what is offered by TiVo and Replay Networks. Digital video recording essentially
replaces a VCR's videotape with a hard drive, offering typical VCR functions such as record
and playback, as well as newer features such as freezing and playing back television
shows while they are being broadcast.
Also in the works are plans to include high-speed digital subscriber line (DSL) access and
larger hard drives in WebTV Plus boxes, industry sources said. Those new features should
be available early next year, sources said.
A WebTV spokesperson said the company does not comment on unannounced products
or rumors.
These upcoming changes are but the latest events in the WebTV tale. When acquired by
Microsoft, WebTV was beginning to make a name for
itself as a low-cost and simple Internet access device
working in conjunction with the TV.
Since the 1997 acquisition, however, the division's focus
has been somewhat blurry, as the company has tried to
carve a niche in Microsoft's competing online and cable
efforts. With PC and Internet service provider (ISP)
prices declining, WebTV has seen its low-cost
argument erode. Subscribers continue to sign up for the
service, but sales have not met expectations. WebTV has less than 1 million subscribers,
sources have said.
Other issues, including the use of the Real Audio media player and the departure of
cofounder Steve Perlman, have plagued WebTV. (See related story.)
The future now seems to lay in merging new-age TV functions into the device. By the end
of this month, WebTV will expand the capabilities of the service offered on Echostar's
WebTV Dish set-top box to offer four hours of digital video recording, sources say.
(Microsoft provides basic WebTV service, but companies such as Echostar make the
actual boxes and some supplemental service. Unlike most WebTV boxes, Echostar's
connects to the Web via satellite.)
"Right now [with the WebTV Dish device], you can only pause for up to 30 minutes," said
Marc Lumpkin, an Echostar spokesman. "Next month, we'll offer personal television
services which allow you to record, rewind, fast forward, skip, and replay."
Echostar and WebTV will upgrade Dish receivers which have been shipping since mid-July,
Lumpkin said.
By early next year, WebTV will begin offering set-top boxes that offer up to 14 hours of
video storage and broadband high-speed Internet access, as well, sources said.
The moves reflect Microsoft's attempts to stratify WebTV's product line with high-end and
low-end offerings. For example, at the entry level is the
WebTV Classic device for less than $100. At the other end
of the spectrum is the upcoming Dish player with a larger
hard drive, which is expected to retail at just less than
$500.
"They've been shipping Dish players with larger drives, and
now they'll turn on that capability," said Richard Doherty, a
television and cable industry analyst with Envisioneering
Group, adding that WebTV's strategy has been murky
since Perlman left the company earlier this year.
At the same time, WebTV's aggressive expansion may
indicate it is ceding the market for first-time Internet users
to Microsoft's MSN group. More and more, the two online
divisions have begun to overlap in terms of target markets and resources, with MSN
mulling free or sharply discounted Internet access and WebTV offering MSN branded email
and messaging as part of its television server software products.
Other observers believe WebTV's strategy is on target.
"It's a logical upgrade, and I think it's a reasonable strategy," said Greg Blatnick, an
analyst with Zona Research, especially as TiVo and Replay ramp up their marketing and
retail efforts. "They don't want anyone else horning in on what they think of as their
territory, which is the combination of Internet and TV in the home."
Microsoft and WebTV are protecting their turf for another reason: The digital video market
is projected to be big, as approximately 300,000 units will ship this year, growing to 10
million shipments in 2004, according to market research firm International Data
Corporation.
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