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COMPUTING

From...
Industry Standard

Windows in the living room

December 6, 1999
Web posted at: 10:04 a.m. EST (1504 GMT)

by Alex Lash

(IDG) -- WebTV's once-simple proposition e-mail and Web surfing over the boob tube has morphed into an embarrassment of multimedia riches. Its latest challenge: fending off a flood of competition in the interactive television market.

  MESSAGE BOARD
Microsoft
 

WebTV now offers digital recording, live pause, e-mail, Web surfing, program guides, interactive games, reminders and more all bundled in various combinations. Some features are available only with cable service, others with satellite receivers.

"WebTV is a difficult product to explain in 30 seconds," says Joe Poletto, Microsoft's VP of network media.

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Microsoft bought WebTV Networks in 1997 for $425 million. Since then, it has fought to move beyond the service's original positioning (read: e-mail for the grandparents) and bring down the average age (41) of its subscribers, which now number more than 900,000. A breakthrough came this fall, when Microsoft announced that Jeopardy and Wheel of Fortune were interactive and available through WebTV. But with such a small customer base, Microsoft has to provide extra ads and other incentives, which Poletto calls "barter-in-kind."

While market analysts are bullish on interactive TV, it remains to be seen which form factors will attract users. Competitors like TiVo, which makes a digital recording device that plugs into a cable subscriber's TV, say simple is better. Microsoft contends TiVo's capabilities should be part of a broader product. "Everyone will start including it in their product line, and it will become a commodity, just a feature," says WebTV cofounder Phil Goldman, who now oversees Microsoft's TV technology development.

Even if WebTV never becomes a smash hit, Microsoft will use it as a test bed for underlying Windows technology as computing moves beyond the PC. The software giant urgently needs to find new markets for Windows; digital TV boxes and other Net appliances are a prime target. So far, Microsoft has bought its way into cable boxes. All of the big licensing deals for Windows CE have also involved significant Microsoft investment the biggest being a $5 billion deal with AT&T, now the largest U.S. cable company.

In the end, Microsoft might be happy doing what it claims it does best: providing the underlying technology for others to build digital applications.

SERVICE COST FEATURES
WebTV Classic $99 for set-top box, $15 a month for service E-mail, Web access, browser-within-TV window
WebTV Plus $199 for set-top box, $25 a month for service

Standard features plus interactive TV, two-day program guide, VCR programming
WebTV PersonalTV (available in December) $200-$300 for EchoStar satellite receiver, $10 a month for service*

Eight to 12 hours of video recording, seven-day program guide, VCR programming, games, live pause, instant replay, personalized news; no Net connection
* For $30 a month, EchoStar customers can get the WebTV personal and plus services


RELATED STORIES:
Should the Internet replace phones as the polling technology of choice?
October 20, 1999
Gates touts interactive TV
October 14, 1999
Windows CE goes browsing
September 30, 1999
MSN on Windows CE, cell phones, WebTV and Macs?
September 16, 1999

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WebTV Networks, Inc.
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