Microsoft to offer voice, video on demand on TV

Video on demand, telephony and online messaging are coming to Microsoft's TV offerings, as the software giant looks to conquer the small screen, sources say.

Video on demand, telephony and online messaging are coming to Microsoft's TV offerings, sources say, as the software giant hopes to establish its television identity.

This week at the Western Cable Show in Los Angeles, sources said the company will provide the goods on its upgraded Microsoft Television Pak, the bundle of applications and services it sells to cable television providers such as AT&T and satellite television providers like Echostar.

The technology improvements, although incremental, reflect Microsoft's overall strategy to unify its disparate Internet properties into a more cohesive unit. Microsoft's Web-oriented efforts include its MSN portal and e-commerce services; the MSN Web Companion device, which runs on the Windows CE operating system; WebTV and Microsoft TV.

Microsoft declined to comment on any specific announcements planned for the Televsion Pak. Nonetheless, the company today announced the new WebTV Personal TV service, which will offer digital video recording functionality to WebTV customers using DISHplayer set-top boxes from Echostar.

Microsoft has split its television efforts into the Microsoft TV product line, which is marketed to these television service providers, and its WebTV business, a set-top box service offering limited Internet access and enhanced television programming.

WebTV is marketed to consumers at the retail level, while the Television Pak is aimed at the back end of a system. It's all part of a broad Microsoft assault on the TV market. A major salvo was fired earlier this year, when it was reported that it invested $5 billion in AT&T to get that company to use its scaled-down Windows CE operating system on its set-top boxes.

Microsoft executives have previously indicated that, eventually, the MSN brand name will dominate all Internet client offerings, while Microsoft TV will be marketed along with other Windows-based back-end technologies to television providers.

Along those lines, Microsoft today announced the new WebTV Personal TV service. As previously reported, the new WebTV boxes from Echostar will allow users to record and playback up to 12 hours of video using a hard drive rather than a videotape.

On Thursday, Microsoft will unveil corresponding improvements to its back-end television offering, Microsoft TV Pak, sources say. A broader announcement with cable and broadband provider AT&T announcing several "showcase" cities where these technologies will be available by mid-year may also occur this week, although some sources said it may be pushed back.

Microsoft has added video-on-demand functionality, which will allow customers of cable or satellite providers using TV Pak to order pay-per-view movies directly through an interactive programming guide. In addition, digital video recording functionality, which the company announced today with WebTV, will become available to interested cable or satellite providers as well. Microsoft will also add new communication and chat functionality, sources say, along with some type of telephony service.

Windows CE developer Bsquare is providing the video-on-demand technology, according to sources close to Microsoft. Bsquare could not be reached for comment.

The company has been rumored to be working on these types of enhancements for some time, including adding the Personal TV functionality to WebTV, and integrating digital video recording throughout its interactive TV offerings. More of the features available through TV Pak will be offered on WebTV when the set-top box completes its transition to Windows CE.

Currently, WebTV runs on a hybrid of its own operating system, combined with Microsoft proprietary technology. Eventually, the devices are supposed to be updated to run on Microsoft's Windows CE, which is what TV Pak uses.

"WebTV is proud to join with EchoStar to deliver the future of television-today," said Bruce Leak, president of WebTV, in a statement today. The DISHPlayer 500 will be priced at $299, with basic satellite service priced at $19.99 per month. The WebTV Personal TV service, which includes the digital video recording capability will cost an addition $9.99 per month, while full WebTV service will still cost $24.95 per month.

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