By William Fellows
Various reports from the cable TV industry show in Anaheim, California last week highlighted Microsoft Corp’s initial failure to strong-arm its way into the digital interactive TV market using Windows CE, WebTV and cash incentives for cable companies to build out digital network infrastructure. The irony is that although the cable industry decided it didn’t want to empower Microsoft by licensing its software for set-tops in deals that would give it a share of transaction fees generated by interactive services, it has by and large, swallowed Microsoft’s vision of digital TV lock, stock and barrel. After some bitter wrangling, the computer industry’s calls for interactive digital TV services to be integrated with the internet, rather than simply deliver improved picture quality, have prevailed. The Wall Street Journal reports WebTV president Steve Perlman agreeing that things haven’t gone the way Microsoft would have liked. The control issue created a lot of anxiety a year ago, he said, we walked in saying ‘Here’s a cool way to do it.’ But there was a lot of push-back saying ‘We don’t want to give you so much control.’ A battle between Microsoft Windows CE and Sun Microsystems Inc’s Java for the hearts and minds of the cable companies ensued; Sun and Microsoft wanted new generations of set-top boxes to support their software. However Microsoft’s one customer to date, Tele-Communications Inc, paid only a one-time license fee – plus it didn’t grant Redmond any rights to transaction fees – and the Microsoft software will only be used on some five million net set-tops, less than half the number TCI reportedly plans to deploy. TCI has also said it will develop services using Java and picked Intuit, BankAmerica and @Home to offer bill payment and financial services, not Microsoft, the paper reports. At the Western Cable Show last week, Microsoft effectively unveiled Plan B which amounts, as far as we can tell, simply to making all of its interactive TV products available so that cable companies can cherry pick and customize to suit their needs. Along the way Microsoft picked up a deal with Scientific- Atlanta Inc which will be able to offer custom versions of WebTV to its cable customers on the Scientific-Atlanta Explorer 2000 digital set-top box and broadband delivery system.
