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Study dampens WebTV forecasts

Just because Microsoft bought WebTV, the success of simplified Internet access devices isn't necessarily a sure thing.

Just because Microsoft (MSFT) bought WebTV, the success of simplified Internet access devices isn't necessarily a sure thing.

Forrester Research says WebTV-like boxes, Internet-connected screen phones, and other such Net "appliances" won't be in 1 million U.S. households until the turn of the century. The reason: a lack of compelling content.

Earlier this month, Microsoft purchased WebTV in a cash and stock deal estimated at about $425 million. The acquisition is part of the company's strategy to move its operating system software from desktop PCs into living rooms with Net-enabled television sets.

Yesterday, Microsoft senior vice president Craig Mundie said the company expects "40 million PCs by the year 2000 that are equipped with the hardware to be a digital broadcast receiver." But if the Forrester report is right, that forecast may be exaggerated.

"It will take three years for the industry to create hardware and content that can deliver what consumers really want--interactivity that enhances their television experience," said Josh Bernoff, a senior analyst with Forrester, in a written statement.

In the meantime, Bernoff expects Internet screen phones to be more quickly adopted because they can deliver rapid access to voice and data services, including email and limited Web browsing. Forrester says that there could be as many as 1 million screen phones in service by 1999.

The research group surveyed 51 developers of consumer-oriented Web sites and 42 firms involved in the Net TV and phone market. It reported that 76 percent of the content providers weren't adapting their content for the viewing habits of those with Net TVs and screen phones. Nor are those providers going to create special content until there are enough devices to justify development, either, the report added.

Bernoff, who maintains that television makes consumers passive, says that consumers will remain "unmoved" until features like chat and commerce are linked to TV shows and searchable TV listings appear.

In addition, Web content doesn't look good on television screens without special hardware and software.

Television sets use a technique known as "interleaved" scanning of images, meaning that all the odd-numbered lines on the TV screen are displayed first, followed by the even ones. Most Web pages are designed to be viewed on computer monitors, which use "progressive" scanning, transmitting each line from top to bottom, a method that is slower but results in a clearer image.

Once the necessary developments in hardware, software, and content occur, Forrester predicts that as many as 14.7 million households with TVs could be connected to the Internet by 2002. It also estimated 9.2 million households with Internet-enabled screen phones.

Forrester's findings echo a number of similar reports from other market research firms. A recent survey from Jupiter Communications predicted there will be 12.7 million Net TVs by the year 2002.