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RealTime IT News

Microsoft Moves WebTV Operations

Four years later, Microsoft Corp. is finally integrating its Microsoft Network and WebTV services.

WebTV, purchased in 1997 for $425 million, brings the Internet to the television, giving subscribers the ability to send and receive emails, partake in interactive TV offerings and surf a limited range of Web sites.

The service is expected to compete with AOL Time Warner's own interactive counterpart, AOL TV.

The move to bring WebTV and MSN together took a long time to develop, in the eyes of many industry experts. Because Microsoft's Internet service provider arm is not fully integrated, many users can use their current ISP to connect to WebTV's service.

A Microsoft spokesperson said the move was really more of a human resource shift than anything else, and will not result in any job losses. UltimateTV, headed by WebTV Networks president Bruce Leak, will remain as a separate unit in Mountain View, CA.

"It's just the service that's being moved over to Redmond," the spokesperson said. "Users will still be able to connect to WebTV with their ISP for the time being. I expect that will change down the road."

Interactive TV is not the runaway hit that many predicted last year. Touted as an alternative to buying an expensive PC, company officials expected sales to surge.

Despite a big push in advertising, however, Microsoft has only about one million WebTV subscribers. Reception to AOL TV has reportedly been as lukewarm.

Why the underwhelming response?

The service would have been much warmer even two years ago, before companies started selling low-end PCs for as little as $199.

WebTV, on the other hand, costs $199 for the receiver and $49 for the optional keyboard. The Internet service runs up to $24.95 a month. Internet browsing is also limited, since TV-enabled Internet service does not support Java applications, used by many Web sites for online gaming and chat room services.