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
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
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."
With several updates for its home entertainment software, Microsoft is homing in on digital media.
Windows XP Media Center Edition 2005: A new version of the entertainment operating system supports multiple tuners, online scheduling of recordings, a new movie-finding feature, CD and DVD burning from within a remote-control interface, and limited support for digital and high-definition TV.
Media Center Extenders: These set-top boxes enable people to watch TV and videos that are stored on a Media Center PC in a separate room.
MSN Music: Microsoft's online store moves from testing to formal launch, gaining exclusive rights to AC/DC's music collection.
Windows Media Player 10 Mobile: The first two devices to support the mobile version are an Audiovox Smartphone and a new Pocket PC from Dell.
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.
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,"
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.
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.
TV viewing is central to Media Center 2005.
To help sort out all the devices and services that work together,
the company is touting its , 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
"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."
At Microsoft's LA bash, the stars
are the new Media Center PCs.
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.
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."
Dell, HP, Gateway and more take
the wraps off new media centers.
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."