The Redmond, Wash.-based software company is betting much of its future on its ambitious .Net strategy, which involves moving many of its software products into a service mode, where customers might rent access to Office or subscribe to music from MSN.
Because that strategy requires people to have more bandwidth than is reachable via simple dial-up modem connections to the Internet, the company has also turned into one of the biggest boosters of the high-speed Net, with a history of broadband investments.
In remarks prepared for a speech to the Cable & Telecommunications Association for Marketing (CTAM) Summit Tuesday, Belluzzo said that virtually all of Microsoft's core products were being built in a way that would help further the network companies' aims of attracting new broadband subscribers.
"Microsoft is committed to helping make the broadband experience more useful, fun and engaging for consumers while making broadband services more profitable for the cable industry," Belluzzo said in remarks released in advance of his speech. "The challenge is for the leaders from the key technology and media industries to develop the kinds of services that will really make a difference in people's lives and stimulate new business opportunities."
This chicken-and-egg problem identified by Belluzzo has haunted the high-speed Internet business since its inception. Internet service providers, cable and telephone companies have launched massive marketing campaigns to persuade people to sign up for high-speed Net services. But these generally cost more than twice as much as ordinary dial-up Net access, and to date there has been little content online that has justified this extra expense.
The onset of services like Napster, which allowed the downloading of vast arrays of music for free, did help drive some demand, analysts say. But now companies like MSN are hoping that more legitimate services, such as authorized music subscription plans or gaming services, can step in to fill the void left by Napster's decline.
Belluzzo cited several things Microsoft is doing to help drive broadband demand:
Home networking is a key part of the Windows XP operating system, allowing a high-speed connection to the Net to be shared with different entertainment devices around a home.
The Xbox gaming console system will be set up with the ability to play games online over a fast connection.
The Microsoft TV platform lets cable companies create interactive TV applications that take advantage of a high-speed connection.
MSN TV, created by the merger of WebTV and MSN content, is pushing people toward broadband.
The Windows Media audio and video technology is being positioned as the basic infrastructure for music and video download and subscription services.
Microsoft has also invested heavily in broadband companies, including AT&T and Comcast, hoping to help jump-start subscriber figures.
Other companies, such as RealNetworks and Sun Microsystems, are competing with Microsoft for different slices of the broadband content infrastructure.
At the end of the first quarter of 2001, about 7 million combined cable and DSL broadband lines were operating in the United States, according to analyst firm TeleChoice. Cable was leading with 4.8 million subscribers, while DSL had 2.1 million subscribers, the company said.