Microsoft opens Windows to the home

LOS ANGELES--After trying for years to make the case that its products belong in the living room, Microsoft has decided its best approach is to tackle the whole house.

Although Apple Computer's combination of iTunes and iPod has proven pretty popular, Microsoft is betting that people want to do more with their music and that they want to be able to move video and pictures around as well.

Chairman Bill Gates made that case at a tony press event at the Shrine Auditorium here. With the help of singer Queen Latifah, Gates showed off a host of gadgets that use one or another Microsoft technology to access movies, music and video.

"What we've got here is an ecosystem," Gates said. "It's got partners, its got platforms, and it's got lots of choice. It's not just one device but all the different devices you want now and into the future."

At the center of Gates' case is Windows XP Media Center Edition 2005--an update to Microsoft's entertainment-oriented operating system. As earlier reported, the updated version of the operating system adds a number of new features, including support for multiple television tuners. A new MSN utility lets customers schedule TV recordings over the Internet.

Among the PCs that will run the new operating system is Hewlett-Packard's stylish Digital Entertainment Center, which the company introduced last month in Miami. There are also a number of other living-room boxes, desktop PCs and notebook computers that will run the software, including systems from Toshiba, Dell, Gateway and Sony, among others.

A host of companion products are also set to make their debut. There are set-top boxes, handheld devices and media receivers--all of which can access the same movies, music and photos stored on a single Windows XP-based computer.

The stakes are high for Microsoft. The digital revolution is happening, with or without the company, and Microsoft is certainly hoping for the former. Digital cameras are relegating film cameras to dusty shelves and TiVos are replacing VCRs. And where CDs, albums and casettes were once the home to music collections, Americans now have 10 billion music tracks on their computer hard drives.

		Commentary No rush to the Media Center Forrester Research predicts that version one of Windows Media Center Extenders will fail to excite most consumers this holiday season.

The prior incarnations of Media Center sold about 1 million copies, Gates said, adding that this version should prop that up by a factor of four or five.

"We are moving media center into the mainstream," Gates said.

Will Poole, senior vice president of Microsoft's Windows Client business, said now is the time for that move. "We look at all of those things and we say the market is hot and consumer interest is hot," Poole said prior to Tuesday's event.

At the same time, Microsoft and the PC industry need something to drive computer sales until the arrival of Longhorn, the next major version of Windows in 2006.

Making music
On the music side, Microsoft announced the formal launch of its MSN Music store as well as the fact that the store will start selling music by heavy metal group AC/DC--a longtime holdout in the digital music market. The company is touting several new media players that support subscription-based music as well as the first two devices that come with Windows Media Player 10 Mobile--the Audiovox SMT5600 Smartphone and Dell's Axim X50 Pocket PC.

To help sort out all the devices and services that work together, the company is touting its "Plays For Sure" program, which guarantees, for example, that a device with the Plays For Sure logo will play any music bought at an online store that displays the insignia.

While Apple's iPod and iTunes Music Store have so far proved more popular, Poole thinks that Microsoft will eventually win the day. But, he said, it will take some time before Microsoft-based players and stores are viewed in the same light as Apple.

"All of that flexibility plus the choice of devices will start to begin to kick in this holiday season in terms of volume and will just escalate over the course of next year," Poole said.

Part of Microsoft's challenge, Poole acknowledges, is that its options have lacked the simplicity others have offered. "Frankly, the Microsoft ecosystem has had more complexity in the past than consumers need to see going forward."

With Media Center Edition 2005, Microsoft is dipping its toe into the world of digital television. For systems in the United States, Microsoft is supporting recording high-definition TV, but only for free, antenna-based signals. Poole said the reason is that cable and satellite providers have not yet provided access to their high-definition signals.

Although TV recording continues to be a major focus of Media Center, Microsoft decided to allow computer makers, for the first time, to offer devices with no tuner at all.

Poole said the move will allow computer makers to offer machines that cover nearly the full range of prices, with low-end machines starting in the $600 range and the fanciest of machines costing more than $2,000.

Breakout performance?
As a result, Microsoft is counting on Media Center moving out of its niche share of the consumer PC market.

"We certainly will move from single-digit to double-digit percentages, there is no question about that," Poole said. "How big of a double digit I'm not sure I know."

Although the company would like to see the premium Media Center edition capture an ever-larger share of the consumer market, Poole said he doesn't see a day in the near future where Media Center, or its features, just become a part of Windows' home edition.

"There still will be customers that want the simple and basic, and we want to address their needs as well," Poole said. "It's going to be more than 10 percent this year, but when is it going to be more than 50 percent, I couldn't tell you. We are headed in that direction."

In addition to adding features to Media Center, Microsoft has also had to invest time on the basics, some of which were less than adequately handled in past Media Center releases. Chief among these is video quality, which in many cases was inferior to DVD players that cost less than $50.

"Video quality is a huge priority for us," Poole said, noting that the company was constantly testing the new OS to make sure it was comparable or better to such consumer electronics rivals as TiVo. "I expect this will actually be a strong selling point for Media Center going forward now, rather than an area to question, as it has been in the past."