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MSFT unveils TV software
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September 8, 2000: 5:26 p.m. ET
Microsoft to incorporate TV software into Windows operating system
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NEW YORK (CNNfn) - In a move that could blur the lines between televised entertainment and surfing the Internet on a personal computer, Microsoft Corp. said Friday that it will make software to enable PCs to view a future generation of enhanced television services.
Microsoft (MSFT: Research, Estimates) said it would incorporate this television-viewing software into select future versions of the Windows operating system. However, the Redmond, Wash.-based software giant said that it is still committed to delivering enhanced television services through set-top boxes, in addition to personal computers.
Microsoft is demonstrating its television software at the International Broadcasting Convention in Amsterdam.
"A new breed of PC appliances is emerging aimed at home entertainment rather than workplace productivity," said Jon DeVaan, senior vice president of Microsoft's television division, in a statement. "With extra multimedia functionality such as DVD players and digital media jukeboxes, these new appliances are far more likely to be found in the living room than the office."
Microsoft said that its television software would shield developers from the complexities inherent in supporting several different types of broadcast networks.
Off to a slow start
Interactive television has been off to a slow start in the U.S. because it faces a classic chicken and egg problem. The creators of television programming don't want to make a large amount of interactive content until millions of consumers have set-top boxes capable of handling that content. Consumers, meanwhile, don't want to buy the set-top boxes until a large amount of interactive programming is available.
As an example, the "personalized television" service TiVo, based in San Jose, Calif., reported revenue of only $719,000 in the quarter ended June 30, and had only 51,000 subscribers. TiVo (TIVO: Research, Estimates) posted a net loss of $29 million for that quarter.
TiVo competes with Microsoft's WebTV. When combined with a piece of hardware made by the satellite dish company EchoStar Communications (DISH: Research, Estimates), WebTV can simultaneously record and play back digital video, store up to 12 hours of programs, and freeze a live TV program. WebTV now has about 1.1 million subscribers, according to Microsoft.
Competing software platforms
Microsoft's television platform competes with that of OpenTV, a provider of digital television software based in Mountain View, Calif. OpenTV (OPTV: Research, Estimates) software is now installed in more than 9.3 million digital set-top boxes. The company entered the U.S. market earlier this year through a partnership with the EchoStar DISH network.
Microsoft also competes in the television area with San Jose, Calif.-based Liberate Technologies (LBRT: Research, Estimates). Liberate has a software platform for delivering Internet-enhanced content and applications to information appliances, such as television set-top boxes and game consoles. The company has a series of big financial backers, including Acer, America Online, Comcast, Cox Communications, General Instrument, Hambrecht & Quist, Lucent Technologies, Oracle and Sun Microsystems.
Philips partners with everyone
While Microsoft, Liberate, and OpenTV fight for control of the digital television software market, Philips Electronics is playing it safe by making set-top hardware for every company in sight. As an example, Philips Electronics and Microsoft said Friday that they would collaborate on the development of software and set-top boxes that cable television companies will be able to use to provide enhanced television services.
Philips already supplies the hardware for Microsoft's WebTV subsidiary, as well as for the competing TiVo service. The Dutch electronics giant has collaborated with Liberate Technologies to make a receiver for America Online's television service, and it said on Friday that it would extend its relationship with Liberate to make future generations of digital set-top boxes for interactive television. 
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