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Microsoft, Thomson extend deal for MSN TV box

Revamped device will let subscribers stream music and video from the Net and from files stored on PCs.

Microsoft said Monday that it has extended a four-year deal with French consumer electronics manufacturer Thomson to make a new set-top box for the software giant's MSN TV service.

Though Microsoft did not disclose details of the product, MSN TV General Manager Sam Klepper said in an interview with CNET last week that a new MSN TV 2 box that targets the Internet-savvy buyer rather than the technology neophyte is being developed. According to a source, the device will have an estimated price of $199.

Klepper added that the gadget will have broadband and home-networking capabilities, being able to stream video and music from the Internet or from files stored on a PC, and also grab photos from e-mail or from a PC's hard drive for a living room slide show.

In 1997, Microsoft bought WebTV--later renamed MSN TV--in a $425 million deal, marking the software company's entry into the digital convergence arena. The current MSN TV service lets subscribers use their TVs--in conjunction with an Internet receiver, or set-top box, and a special keyboard and remote--to surf the Web and send and receive e-mail and instant messages.

The new system, a complete overhaul of Microsoft's existing set-top box, will hit shelves by the 2004 holiday shopping season, according to a statement from Microsoft. Thomson also makes the current version of the box.