Microsoft Plays to the House

Seeing great potential outside of the office, Microsoft is peering into people’s homes for additional revenue streams.

Which is why the company founder, chairman, and chief software architect Bill Gates returned to Las Vegas last night to deliver his sixth “pre-keynote” for the Consumer Electronic Show.

“In the ’90s, people got ahead of themselves — the companies’ valuations, the way they thought all the pieces would come together,” Gates said. “But now those things are really being delivered and they are being delivered through solid products that stand the test of the marketplace.”

The reality is, consumers want their digital media cheap and plug-and-play. Gates said Microsoft is working with software and hardware vendors to create a “seamless computing” experience focused on entertainment delivered over wired and wireless broadband.

It’s about time, said industry analyst Rob Enderle. ” Microsoft and Apple were talking about the digital media center without spending a lot of time articulating what it was the center of,” he said. “[At Gates’ keynote,] Microsoft is for once talking about the kinds of things you’d like to connect to.”

Gates announced Windows Media Connect, technology for hardware manufacturers to use in developing “digital media receivers”, or DMRs, which can play digital media files accessed on personal computers over home networks. Media Connect will let these devices automatically discover and access supported content on Windows XP-based PCs. Microsoft said it supports interoperability standards such as Universal Plug and Play and HTTP, and it plans to conform to the guidelines being developed by the Digital Home Working Group. Creative Labs, Dell, Simple Devices and Toshiba are among the manufacturers that said they would use the technology.

He also unveiled Windows Media Extender, which lets users access digital entertainment residing on a Windows XP Media Center Edition PC from television sets throughout the home — even if someone is using the PC. The technology will be available through set-top boxes, integrated into new television sets, or as an add-on to Microsoft’s Xbox game console.

At the same time, Microsoft hopes to reach the growing broadband audience with free and premium services. (In-Stat/MDR reported 14.6 million cable modem subscribers in North America by mid-2003.) The Portable Media Center, Gates said, “is going to not just have your music on it, but it’s going to have your movies there, movies for your kids, the movies you like, you just find it out on the Web, download it, off you go.”

Gates introduced a new version of MSN, including MSN Video, which delivers free broadband video content to all and My MSN visitors in the United States. The service was launched with a range of content partners, including Discovery Communications, NBC News and NBC Entertainment, and Showtime Networks.

The company created a paid, premium version of MSN, at $9.95 a month or $99.95 per year, that includes not just content but software tools for sharing content, blocking spam and pop-up ads, photo editing, managing finances and online learning. Gates pointed out that this was a departure from the way access and software were provided in the dial-up world. MSN Premium, he said, is “a software value added independent from how you buy your broadband.

Products incorporating Windows Media Center and Windows Media Extender technology are expected to ship in time for the 2004 holiday season. “The most interesting products coming out at CES are the portable media centers, according to Enderle. “Strangely enough, a lot of the technology that has been developed for other things like cell phones and PDAs is now finding its way into reference designs [for digital home products],” he said. “We’ll see the most rapid technological advances in the space that we’ve ever seen, because all the parts are already there.”

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