Good on describing someone with a motive for seeking partnerships for enabling visions
From the NY Times
May 10, 1999
" NEWS ANALYSIS
Microsoft Hunts Its Whale, the Digital
Set-Top Box
By JOHN MARKOFF
as Bill Gates become the Captain Ahab of the information age?
Gates' white whale remains an elusive digital set-top cable box that his company, Microsoft Corp., is hoping will re-create the personal
computer industry by blending the PC, the Internet and the television set into a leviathan living-room entertainment and information machine.
It has been an obsession for more than six years for Gates, whose "Windows everywhere" software strategy has led the company to look
to extend its Windows operating system monopoly into every cranny of the computing industry -- from mighty mainframes to the computers
embedded in cars.
Still, it is the tantalizing possibility of the computerized television set that has fixated Gates most, leading to the construction some years ago
of a faux living-room laboratory in a building on Microsoft's office campus in Redmond, Wash.
Presumably, that is because the prospect of digital television -- part PC, part boob tube -- promises the greatest return on the company's
research and development investment. Digital television holds out the Holy Grail: the intersection of the nation's most vibrant industries,
including media, computing,
entertainment and telecommunications.
Small wonder, then, that Microsoft agreed last week to invest $5 billion in AT&T, as part of that company's deal to add MediaOne Group,
the cable television company, to its recently acquired communications
Inc. cable empire.
Television sets are in some 98 percent of American households, while
personal computers are having trouble breaking the 50 percent threshold. Thus, a Windows operating system monopoly on the set-top box
would dwarf the scale of the PC industry.
"The television is the 3,000-pound gorilla," said Nicholas Donatiello,
president of Odyssey, a market research firm in San Francisco.
And yet, just as Captain Ahab's quest for Moby Dick led to a miserable
outcome, there is no certainty that Microsoft's quest for the television set top will succeed.
As early as 1993, Microsoft proposed a joint venture with Time Warner Inc., AT&T and TCI called Cablesoft, in an effort to harness the
cable and phone industries to the Microsoft Windows software
operating system standard. Since then Gates has repeatedly tried to forge pacts with partners in those industries.
Though some have welcomed such overtures, like Comcast, the cable
company in which Microsoft acquired a 11 percent stake a few years
ago, others have held back. The laggards feared they would inevitably fall victim to the same forces that enabled Microsoft to reduce many
PC hardware makers to mere purveyors of commodity goods.
But Microsoft's considerable financial heft has eroded most resistance. Besides the Comcast stake, Gates' investments in his pursuit of interactive digital TV have included WebTV, Time Warner's Road Runner, four European
interactive cable television investments and, finally, last week's investment in AT&T.
In return for a $5 billion stake, AT&T has warily agreed to license a
minimum of 5 million copies of Microsoft's Windows CE operating
system and engage in several showcase tryouts of the software, the
consumer-electronics version of Microsoft's industry-dominating
Windows software for PC's.
The deal will ensure that Microsoft gets an inside track in the new
interactive television industry, which after years of delay appears to be showing some signs of life.
Clearly Microsoft's chairman believes with great certainty that
interactive digital television is the Next Big Thing. And yet just as Gates, the visionary, entirely missed the dawning of the Internet, there is growing evidence that rapid technology transitions are not predictable -- let alone manipulable.
In pushing for multimillion-dollar test runs, Gates may be ignoring years of consumer indifference and outright interactive television failures like Time Warner's debacle in Orlando, Fla., a few years back -- not to mention the rapid emergence of a range of alternative technologies for delivering Internet content that may quickly bypass the living room.
The risk to Gates is that the interactive television set, upon which he is betting most heavily, may prove a mirage that wastes billions of dollars of investment capital and Microsoft development efforts.
The offspring of a dream that stretches as far back as the 1970s, digital television has long been a Chimera pursued by high-technology
executives -- whether in the form of videotext, video on demand or,
more recently, Internet via television.
The new hope is that while no one has been able to figure out the
challenge of how to supply more than several channels of compelling
programming for a television audience simultaneously, the World Wide
Web would offer an easy solution.
Both AT&T and Microsoft envision that the DTC-5000, a set-top box
due this fall from General Instrument, will serve as a choke point for all the digital information flowing into and out of the home.
The original vision of interactive cable has now stretched far beyond 500 channels to include telephone service, video on demand, stereo audio, video games and Internet access. As a result of this "all things to all people" impulse, the DTC-5000 has sometimes been derided as an information-age Cuisinart.
Indeed, the joke inside AT&T labs, where engineers are testing the box, is that DTC-5000 has so many connectors that the physical integrity of its back panel has been compromised. The prototypes include connections for cable, power, Ethernet and Firewire networks, Universal Serial Bus, telephony, audio, video, infrared, PCMCIA card, smart card and computer monitor.
While simpler and more compelling alternatives -- ranging from the home PC to a growing array of wireless and hand-held computers and phones -- offer a seemingly more convenient way to obtain Internet data, Gates has continued to pursue the parallels between the world of interactive digital television and the personal computer industry, and to re-create a dominant role for Microsoft. Indeed, forcing Windows CE on the cable industry has become a virtual religious crusade inside Microsoft's headquarters.
"This is a big frontier, and Bill is scared to death that it's going to pass him by," said a member of the AT&T team that negotiated the deal with Microsoft. As described by Microsoft's deal-maker and chief financial officer, Greg Maffei, the investment makes sense as a bet on the future of high-capacity -- or broadband -- telecommunications networks.
"There is finally a plan to go out and deploy something, and that's a great opportunity for us," Maffei said in a telephone interview Thursday, after the deal closed.
Microsoft executives argue that a business rationale now exists for
interactive television -- as opposed to the Orlando interactive television pilot that Time Warner started with great fanfare in 1994 only to unceremoniously shut it down in 1997.
"Deregulation is allowing a single supplier and pipe into the home to
provide digital television, telephony and high-speed Internet access," said Hank Vigil, vice president for consumer strategy at Microsoft.
Yet, the crusade to bring E-commerce to the family-room sofa is
probably no closer this week than before the arrival of last week's
alliance between the software and the telecommunications industry giants.
In particular, AT&T will be competing with other technologies
challenging cable as a means to deliver Internet data: fixed and cellular wireless telecommunications; the phone industry's digital subscriber line and interactive satellite systems from the Hughes Electronics subsidiary of General Motors.
Moreover, other technologies -- including the PC, digital videocassette recorders from companies like Replay Networks Inc. and Tivo Inc., as well as a new generation of video game players from Sony, Sega and Nintendo -- will all contribute to the accelerating fragmentation of the mass cable-television market.
AT&T may even become its own largest competitor, especially for
providing consumers access to Internet electronic commerce. The
company has quietly accelerated plans for a nationwide introduction of
Internet-ready cellular phones, skipping 64 kilobits a second and going directly to 384 kilobits.
Such a network will be ideal for a new generation of internet-compatible telephone-Web browsers now being shown by Nokia and Ericsson. Though a shift to mobile Web browsing would be warmly greeted by AT&T, it is likely to sharply limit the market for consumers willing to buy an expensive additional Internet account just to permit them to browse the Web on their TV.
And in the mobile and wireless world, Microsoft is already at a clear
disadvantage competing with the cellular phone industry, which has
shown little interest in a Microsoft Windows CE operating system.
Gates appears to have nearly infinite capital to invest in his dream, but there seems to be little to ensure that he will be able to enact his vision. That, of course, is the risk of being a visionary. "
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As you point out, GE-NBC have raised the "bar" in interactive delivery. While Ampex need not win the war, a small tactical victory here or there would do this micro / small cap Ampex very nicely.
The pressure is now "on" for CBS, AOL, and even AT&T plus MSFT. Whatever twist and turn this story takes, each of these high profile competitors is going to have to come to term with "on-demand" storage, specialized video archiving and content management and delivery peculiar to Internet interactive media.
Possibly, this could be a wonderful thing for Ampex as a supplier of equipment, digital video "know-how" and soon perhaps narrowcast expertise. As the competition intensifies among these majors, just as in hostile takeover bidding wars, ego will prevail over fiscal common sense and dollars for showcase services could shower with abandon.
Far from nervous reaction to this GE-NBC news item, I see is as further evidence that many industries are coming "this" way. And that Bramson while currently ahead of the curve may be just far enough to be relevent in a commercial application sense which this time around is better than being relevent in a strictly engineering sense.
Ed Perry |
