July 27, 2004 4:50 PM PDT

Microsoft gives MSN TV a face-lift

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Microsoft is getting ready to release a new version of its MSN TV set-top box, this one aimed at the Internet-savvy buyer rather than the technology neophyte.

Whereas the original WebTV and its successor, MSN TV, were targeted largely at older Americans who wanted a simple way to get e-mail, the upcoming device is tailored to networked homes that already have PCs and a broadband connection.

"Broadband is exploding. Home networking is taking off," Sam Klepper, general manager of MSN TV, said in an interview. "We felt this was an opportunity to expand our business into a new market."

The MSN TV 2 box is among a wave of new products that promise to shuttle audio and video content throughout the home. In a separate effort, Microsoft plans to introduce Media Center Extenders this fall, a family of set-top boxes designed to display TV shows stored on a Media Center PC in another room. Other companies, including start-ups such as Roku, are also getting in on the act.

The MSN TV 2 device, which is expected to sell for $199, is designed to stream video and music either from the Internet or from a PC. It also grabs photos from e-mail and computers for a living-room slide show. The device will carry the RCA brand of consumer electronics maker Thomson, which is manufacturing the boxes.

The product will be timed to hit shelves for this year's holiday buying season. In October, it will go on sale at large electronics retailers Best Buy and Circuit City as well as at Amazon.com, according to a source familiar with the company's plans.

The original WebTV was acquired by Microsoft in 1997 for several hundred million dollars. Microsoft eventually morphed the product into MSN TV.

Whereas other Internet appliances, such as 3Com's Audrey and Sony's eVilla, were short-lived rivals to the PC, WebTV found a niche with its low cost and its appeal to people who wanted a cheap and simple way to get e-mail. The WebTV service reached about 1 million subscribers. Klepper would not say how many customers are signed up for MSN TV service.

On the software side, Microsoft has been moving its focus gradually from the proprietary code that powered the WebTV to its own standard programs. The upcoming set-top box is based on the Windows CE operating system and features Windows Media Player and the Internet Explorer browser, among other programs.

The bid to recast MSN TV fits in with Microsoft's overall strategy for its MSN online unit. The unit is trying to move beyond its roots as a provider of dial-up Internet access to become a broadband content service, offering video and other premium features to people who already have a high-speed Internet connection.

"We really are trying to take the best of MSN--the content that is most relevant in a living-room setting--and deliver that to TVs," Klepper said.

MSN has focused mainly on providing online access to content that can't be found on broadcast television, such as the full season of Major League Baseball. However, many people who would like those shows are reluctant to watch them on a PC.

"We strongly believe that, and we know that from research," Klepper said. MSN TV 2 gets over the problem by funneling the online programming to a TV set. "We're going to be providing that alternative for consumers," Klepper said.

Klepper would not go into detail about what content MSN TV would offer and would not say how much the monthly fee for the service will be.

Although connected homes are Microsoft's new target, the company plans to continue selling the device to the same types of people that have bought MSN TV in the past. To help with that, the upcoming set-top box still has a dial-up modem for connecting to the Internet via traditional phone lines.

"This is something that our current users, or people like our current users, would be very comfortable using," Klepper said.

Klepper said Microsoft can also deliver content to TVs via devices other than MSN TV boxes. For example, the MSN TV Today service provides limited news and other information to machines based on the Windows XP Media Center operating system. That service is likely to be expanded somewhat when Microsoft releases an update to the Media Center software this fall.

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Actually could work well, if only
These companies would make their digital devices at least 90% compatible with competitive products. The box needs to not only stream video from a Media Center PC, but all other XP machines on the network, in plain old MPEG2 format.

As for music if leave out the ability to stream AAC files from a person itunes/ipod library, they gave just sliced off a big piece of their market.
Posted by robanga (47 comments )
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