Microsoft and the Future of Television

Pastor Mac - 2002.03.13

My Turn is Low End Mac's column for reader-submitted articles. It's your turn to share your thoughts on all things Mac (or iPhone, iPod, etc.) and write for the Mac web. Email your submission to Dan Knight .

Robert X. Cringely, writing for PBS, looks at the future competitive arena for Microsoft. I'm including three paragraphs below because they are the most salient:

So the New Microsoft has to go where the Old Microsoft didn't. This means new markets, which eliminates at least for awhile any antitrust concerns. It also means new enemies, which appeals to Gates. It probably gets boring beating up the same kid every day after school. The New Microsoft will operate in five areas - financial services, video games, television, GPS, and wireless. .Net is the beginning of Microsoft's thrust into financial services, using the old technique of "embrace and extend" to hopefully grab a piece of every transaction everywhere. This is Microsoft number one priority and Gates is determined to see it through before the Windows and Office franchises evaporate, as they ultimately will. With close to $40 billion in available cash, Microsoft will spend whatever it takes to make this happen.

The other market segments - video games, TV, GPS, and wireless - are close enough to what Gates perceives to be Microsoft's core competencies. They are markets where Microsoft has not played or has been a small player. They are markets that are big enough to be interesting or growing fast enough to qualify as successors for Windows and Office. And most importantly, they are segments where Bill feels current leadership is weak and unfocussed.

So look over the next two to three years for Microsoft to use the same "embrace and extend" strategy in each of these areas. We'll see Xbox followed by more and different Xboxes at a rate of evolution that will be staggering. Expect the same thing with Ultimate TV. Look for a major thrust in Windows for mobile phones. And while I'm not exactly sure how GPS will be rolled into this package, I know it will be. In each case, Microsoft will be trying its darndest to build itself into the future, trying to create new de facto standards, which is to say new cash cows. And they will succeed. Current leaders in all these segments should be wary. That or sell out now, because -their future - no matter what happens with the DoJ, any private lawsuits, and those nine errant states - their future is going to be ugly.

I've written before about the direct broadcast satellite industry and the possibility of Apple producing a Cube-like home server as the foundation block of the Digital Hub. Dish Network has used Microsoft to produce a set-top personal video recorder called the DishPlayer. The DP has been a support nightmare for Dish, and there is presently a lawsuit between Dish and Microsoft over continued software updates and bug fixes. Does this sound familiar?

Take careful note of the middle paragraph. Dish is whining about DP bug fixes and M$ wants to do more than build a set top box - they want a steady revenue stream from every aspect of the TV experience. DP was simply an alpha release, UltimateTV is a beta (which they'll abandon just like DP), and then roll some more features into another set top box, including high speed Internet access via MSN, and hype it via a "partner" as the must-have home entertainment hub device.

Likely the "embrace," that is the "partner," will be a media delivery specialist such as Dish or a cable provider. The "extend" will be a feature or function proprietary to the box, such as leveraging Windows Media Player in content storage or playback - or even .Net in some form. The last part of the dance will be "extinguish," when a sufficient user base becomes dependent on the technology and will follow Microsoft regardless and the "partner" is abandoned.

Competing with M$ in this arena (or even allowing M$ to collaborate) could be a kiss of death for anyone, most especially a post-merger Dish. "Embrace & extend" - then pull the rug out. Java, W3 standards, C++, now personal video?

Please, Steve, pick up the phone, call Charlie Ergen at Dish Network, and relaunch the Cube as the home server it's screaming to be.

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