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Microsoft Unveils Windows XP Media Center

Betting that consumers are ready to accept PCs as entertainment devices on par with televisions and stereos, Microsoft on Tuesday announced it would roll out its entertainment-center version of Windows XP in time for Christmas.

The Windows XP Media Center Edition, currently in beta testing under the codename "Freestyle," promises consumers a suite of remote control-accessed multimedia tools, from a personal video recorder (PVR) to digital music, videos and photos. Currently in beta, XP Media Center will hit stores in the North America and Korea by Christmas, and in Japan during the first half of 2003. The company has not announced pricing.

"The PC has evolved from a tool for productivity to a device capable of entertainment, communications and so much more," Michael Toutonghi, vice president of the Microsoft's Windows eHome unit, said in a statement. "Consumers desire more fun and enjoyment from their PC and want it to contribute to their lives even more creatively than it does today."

With XP Media Center, Microsoft hopes to cash in on the growing wave of digital media applications and content, and the slowly building penetration of broadband into the home. The media hub will be loaded onto the PC, with a remote control to make it work in a similar fashion to a TV or stereo.

The XP Media Center has the ability to combine the computer, TV and DVD player. It comes with a PVR, with which Microsoft hopes to capitalize on the popularity of digital-recording devices like TiVo and it's own UltimateTV. The system also has a digital-music center, allowing for cataloguing and playing of MP3s and other music files; a digital photo album; a video collection; and a DVD player.

"I think it's timely," said Ryan Jones, a media and entertainment analyst with The Yankee Group, a research firm. "You're not going to see all PC users rush to this, but it's timely for the early-adopter and even secondary-adopter segment."

Specifically, Microsoft sees great opportunity in the college and teen market, which is already savvy to digital media and also operates in space constraints of dorm rooms and bedrooms.

The XP Media Center will compete with the suite of multimedia tools on offer from Apple, which has pushed hard into offering digital entertainment tools on its Macs. Perhaps looking to steal some thunder from its rival, Microsoft's announcement comes a prior to Steve Jobs' keynote at the MacWorld Expo in New York City.

As Microsoft announced at the Consumer Electronics Show in January, HP, NEC and Samsung have signed on to include XP Media Center preinstalled in PCs.

Microsoft's drive to put itself at the center of home entertainment has been fitful. In 1997, the company shelled out $425 million for WebTV, which was converted into MSN TV. However, despite the early promise of marrying the Internet with television, MSN TV has mostly fizzled, drawing about 1 million subscribers. In June, Microsoft announced a cut-rate pricing plan, with two months of free service, to entice customers to try MSN TV, which allows users to access the Net on their TV through a wireless keyboard.

In a separate announcement yesterday, Microsoft CEO Steve Ballmer said Exchange 2000 server would have an "incremental upgrade" available by the middle of next year. The upgrade, codenamed "Titanium," would allow users easier access to information between their PCs and wireless devices.