June 18, 2007 4:00 AM PDT

Clearer picture for IPTV tech?

MOUNTAIN VIEW, Calif.-Microsoft thinks the TV is about ready for software.

Granted, Microsoft has been thinking that for more than a decade. But there's some reason to think that this time the folks from Redmond could be right.

Although the first stabs at interactive TV fizzled, WebTV topped out as a niche product and most of the cable industry decided it could live without Microsoft running its set-top boxes, a key technology shift may have cracked open the door that Microsoft has been knocking on all these years.

The change is TV's move beyond satellite and cable to so-called IPTV, that is, television that is distributed using Internet Protocol technology, usually by telephone companies. On Monday, Microsoft is introducing the latest version of its software, adding support for sharing digital photos and music throughout the home. And unlike its past TV efforts, Microsoft is finding some big name companies willing to bet on its technology.

AT&T for example, said in January, it was accelerating its IPTV plans, and Microsoft has a number of key overseas telecommunications companies signed on for its technology, including Deutsche Telekom, Telecom Italia, Swisscom and British Telecom.

IPTV has been on the cusp of reality for some time, gaining increasing importance as telecommunications companies feel the pinch in their telephony business from Internet-based calling and look to offer a "triple play" of voice, video and Internet services. But after years of talking about offering TV, the telephone companies are starting to invest serious dollars in their IPTV efforts.

Microsoft's entry into IPTV had humble origins. Back in 2002, most of the company's TV unit was focused on developing software for cable set-top boxes. But two people--Jim Baldwin and Peter Barrett--were thinking about sending video streams over the Internet.

Microsoft IPTV

The pair leased some business DSL lines and used Microsoft's Xbox development kit as a rudimentary set-top box. "We put Xbox development kits in about 10 people's houses in Mountain View and ran some video channels over it," Baldwin said.

By the next year, the two were ready to take their show on the road. They packed up the Xbox units, a head-end system and trekked to the ITU show in Geneva. At the show, Microsoft succeeded in piquing the interest of a number of companies including Swisscom and Bell Canada.

Even as Microsoft continued to develop the software, it invited telecommunications companies to start trials of their own, with Swisscom among those that signed on to try it out. Companies often used their own employees as guinea pigs. AT&T's was the first serious commercial trial, starting in the fall of 2005. The team has grown from just Baldwin and Barrett to a few hundred workers, and IPTV is frequently touted by Microsoft as one of its emerging businesses that is nearly ready to "pop."

Microsoft's top executives have acknowledged that the company was way early in the TV space. Its investments in the cable industry did not give the company the entree it hoped. Its Ultimate TV product a few years later won some fans among TV enthusiasts for its picture-in-picture and video-recording abilities. But the high cost led to little mainstream appeal, and Microsoft stopped pitching it not long after it launched. Even IPTV is moving slower than the company has hoped.

"We've been surprised and sometimes disappointed by how long it takes before things that seem so obvious are ultimately fully realized," Craig Mundie, Microsoft chief research and strategy officer, said in an interview last month. "The IPTV vision as we know it today started out as the interactive TV in 1993, and it's only getting broad deployment today, almost 14 years later."

Related story
IPTV chugs along
Microsoft is upgrading IPTV software for service providers, but flashy, consumer-oriented features will take more time to roll out.

It's hard to say just how much Microsoft has spent on its TV efforts. The company invested $1 billion in Comcast and $5 billion in AT&T back when Ma Bell was buying cable company Media One. In terms of its own products, Microsoft Chairman Bill Gates said in a speech back in 2004 that the company had spent upward of half a billion dollars.

"We got involved in TV-related software way too early, and we spent $500 (million) or $600 million before its time," Gates said in that speech.

Microsoft is trying to learn from its folly and not get too far ahead of where the business is. After initially touting all the amazing new features that IPTV would herald, Microsoft has actually gone to market with a product that looks and feels a lot like traditional cable or satellite.

Longer-term, though, the company knows it needs to make sure it has something that makes its technology stand out.

"When you compete on price and channels you are basically playing everyone else's game," said Paula Reinman, director of market intelligence for Microsoft TV.

See more CNET content tagged:
IP television, Swisscom AG, set-top box, telecommunications company, Mountain View

2 comments

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Swisscom IPTV, a user's opinion..
November 2006 I signed onto Swisscom's newest adventure,
IPTV. I have to admit it's fantastic, when it works..
The problem is bandwidth, IPTV needs lots of it to funtion
properly and Swisscom knows it. Aparently IPTV turned out
requiering 3 times more bandwidth than Microsoft first claimed.
So Swisscom is now in the middle of the biggest upgrade ever in
it's history bringing the whole system from ADSL up to VDSL so
as to be able to supply the bandwidth needed for IPTV. Me, I'm
one of the less lucky ones at the moment since my home is just
out of reach of VDSL and am still stuck with ADSL until they get
my area upgraded. In the meantime preformance and quality of
IPTV at my place is still below standard. For example I'm not able
to watch one channel and record another channel at the same
time due to bandwidth restrictions. Often I have channels that
the sound and picture are offset by as much as a full second.
The system often suffers from dropped packets, in other words
the picture might have scrambled pixels, freeze for a split
second or even worse, come to a full stop which requires me to
change the channel and back to get it running again.
One of my biggest complaints is the set top box (STB), the thing
can be sluggish and nearly unresponsive at times when using
the menus or trying to view the TV-Guide. Selecting a program
for the STB to record is a gamble as well, many times I've missed
the final minutes of a program or worse, the recording froze at
some point and didn't restart leaving me with half an hour or
more of "freeze frame".
Yes, I know this technology is still in it's infancy that's why I
haven't had my regular television cable disconnected as of yet
but I see the light at the end of the tunnel and it's shining
brightly..!!
Posted by imacpwr (456 comments )
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IPTV tech
IPTV is definately the way to go. Even though they may run into a few speed bumps, there is no doubt that is were the future of TV is going.

The technology may still be in its infant stage but we are living in exponential times.

Cable and Satellite providers better get ready. Companies such as Verizon and even Google are going to be formitable opponents.

<a class="jive-link-external" href="http://www.forestwander.com" target="_newWindow">http://www.forestwander.com</a>
Posted by forestwander (10 comments )
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