January 11, 2007 4:00 AM PST
Microsoft's Bach looks for harmony in entertainment
But the toughest task assigned to the head of Microsoft's entertainment and devices unit may be less obvious: getting all of the software giant's disparate units working together to form a cohesive entertainment strategy.
"It's the reason why we changed structurally how we're organized," Bach said, referring to a September 2005 reorganization that put the teams that develop software for cell phones, TVs and music players in one division reporting to him.
As he toured the crowded Consumer Electronics Show floor here, Bach explained to CNET News.com his strategy for moving the company more deeply into consumers' living rooms.
Bach said one key move has been to use the same teams that developed one new product to create another--such as tapping members of the Xbox game console team to help create the Zune media player, which he knows is a big challenge.
"We've worked well together as a team, and I think we're up to it," he said. "It's not easy, but I think we can do it."
Consumers in the frame
Bach said the company has two immediate priorities for its consumer entertainment products. The first is making them into Microsoft-size businesses, akin to franchises such as Office and Windows.
"In each of these individual businesses, we have to get them to scale," the division president said. "Xbox is getting there, mobile phones is getting there, Zune is just getting started. TV and video is just getting started. But we're making progress."
Next is trying to find a community aspect. Microsoft needs to "figure out how to create the social aspects of entertainment and bring that to music, and bring that to video and TV, just like we brought it to Xbox," Bach said.
The company has seen with multiplayer online game service Xbox Live that when it can convert customers into a community, it adds up to a better business, he added.
"Once somebody joins the Live network, whether as a member or as a subscriber...they buy more games, it turns out, they start to download videos, they start to download arcade games," he said. "Pretty soon, that's their world. It's the social-networking phenomenon that you see in the video space and you see in the social community space on the PC."
Buy once, listen all over
Bach's longer-term goal is to start dovetailing all of Microsoft's different entertainment pieces. It's been slow going so far, he said.
As he sees it, people should be able to buy music once and then use it on any Microsoft-powered device--whether a Media Center PC, an Xbox or a Zune. Connected services, such as chat, should be able to cross barriers, too.
"There is just my music, and it is there whenever I want it," he said. "And when I want to talk to my music friends, they are there too."
One of the major obstacles to setting up the cross-use of music, film and TV clips is convincing Hollywood studios and record companies to allow it, Bach said. As copyright holders, such companies are typically nervous about the distribution of digital copies of their works.
"Most of it just comes down to people really understanding the scenario and getting comfortable with the technology," he said. "There's still a lot of understandable paranoia about content."
But as entertainment companies see the technology in action, and start to see alternative business models producing real revenue, they will embrace it, he said. "People have to see it. They have to feel it. They have to see it materially change their business."
Microsoft has made some small gains. In particular, it has persuaded record companies to allow Zune to squirt songs from one device to another--albeit with heavy restrictions. Songs that come from another Zune can be played only three times over three days.
Bach also said he doesn't believe Micorsoft will have to convince everyone itself. "Really, what it takes is it takes two or three leaders to blaze the way," he said. "Once we get that to happen, I think the rest will follow."
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