Time Warner to Test Microsoft’s iTV Software

The nation’s number-two cable operator, Time Warner Cable plans to test out a re-architected version of Microsoft’s interactive television software, a spokesman for the cable company said.

The trial is expected to be deployed in Time Warner Cable’s division in
Beaumont, Texas, said Mark Harrad, spokesman for Time Warner Cable, and will
include interactive programming guides that have been developed by
Microsoft’s television division.

Microsoft already has a similar trial in the works with Comcast , the largest U.S. cable operator, which was announced in June. Microsoft still owns a small percent of Comcast’s stock. That trial involves a test of Microsoft’s interactive television software, which is part of the software company’s new Microsoft TV Foundation it also announced in June.

The new television foundation is now in testing phase of its new platform
for enabling cable companies to develop digital programming and services, by
providing middleware and software that effectively creates a layer for
applications and communications between the consumer’s set-top box and
servers that reside in cable head ends.

Comcast’s and now Time Warner Cable’s software trials come as Microsoft
seeks to offer new software platforms that help cable operators generate new
revenues from their digital cable investments, such as on-screen TV guides,
movies-on-demand and new interactive advertisements.

In addition, the cable companies are expected to cast a keen eye on how
the Microsoft interactive software platform integrates with its cable
technology partners, such as Motorola and Scientific Atlanta, two major
providers of digital set-top boxes to the cable industry.

If the Time Warner Cable trial goes well, the deal could be pivotal for
Microsoft, said James Brancheau, vice president, media industry research for
technology research firm Gartner G2.

Microsoft historically has had a hard time cracking the major MSO (cable
operators)” with its interactive and set-top box software, Brancheau said.
“Now they’ve re-architected the whole application and need badly to have it
in the field and commercially successful.”

That two top players in the U.S. cable market have agreed to test out the
software is a big plus on the credibility side for Microsoft, Brancheau said, a deal that is also expected to show whether the software integrates well with other cable
television technologies.

“Time Warner Cable is very aggressive and savvy as a technology adopter,”
Brancheau added. If Microsoft’s trial proves out, the result could be a big
opportunity to position itself in an interactive television screen after years of efforts and investments in interactive television platforms.

According to Gartner, as of mid-year 2003, 22 million U.S. households
were upgraded to digital cable, out of a total base of 66 million cable
households in the U.S. (The total household base in the U.S. is 106
million.)

So, the deal gives Microsoft some room to grow as cable providers upgrade
their analog systems to digital cable boxes, the basic building block for
interactive programming, Brancheau noted.

Microsoft spokesmen were not available by presstime.