Under the agreement, Microsoft's WebTV service will be available on Scientific-Atlanta's Explorer 2000 cable TV set-top devices. In addition, Microsoft and Scientific Atlanta agreed to jointly develop future set-top boxes.
The basic "dumb" cable boxes that sit on top of cable-capable TVs today are expected to be eventually replaced by advanced devices, such as the Explorer 2000, that offer the power of a personal computer.
Currently, WebTV boxes let a customer surf the Web using a television, a remote control, and a phone line. With the agreement, WebTV customers won't need either the WebTV box or the phone line.
Although the agreement is only a preliminary licensing deal, and not a guarantee that Scientific Atlanta will deploy set-top boxes based on Microsoft's Windows CE operating system, the deal may be more show than substance, analysts say.
Connecting to the Internet over the cable TV infrastructure means customers get high-speed "broadband" Internet access, taking advantage of speeds tens of times faster than ordinary dial-up connections used by today's WebTV systems.
"Viewers will find that the response time is closer to what they expect for a television," WebTV President Steve Perlman said today. People using their TVs expect the instantaneous response they get changing channels, he said. Broadband Internet access makes it easier for Net surfers to look at fancy, graphics-rich Web pages, download video and audio, or perform other tasks that strain slower connection techniques.
Though faster, the new WebTV cable service won't be as widespread as the WebTV system using a phone line. The cable system requires that a customer have digital cable service as well as specific hardware from Scientific Atlanta.
The agreement marks the first time WebTV will run on hardware other than WebTV's own, Perlman said. However, the service will appear on other advanced set-top boxes next year, he said. "WebTV technology now will be available to work on essentially any hardware," he said.
Although WebTV customers won't necessarily need WebTV hardware, Perlman said WebTV will continue to design hardware as well as software. "We're doing both," he said.
Also as part of the agreement, Microsoft won a place for its Windows CE operating system. Microsoft and Scientific-Atlanta will collaborate on a next-generation set-top box that comes with Microsoft's pared-down operating system as well as WebTV. That's a victory for Microsoft, which faces competing technology such as Sun Microsystems' PersonalJava for the set-top boxes.
Some were not impressed with the deal.
"It doesn't mean anything--it's just a licensing deal. Everyone licenses everything," said Seamus McAteer, of Jupiter Communications, explaining that the deal was probably necessitated by Scientific-Atlanta's relationship with cable provider TCI, which has already announced it will distribute Windows CE set-top boxes to its subscribers. "Some of the cable operators are saying that they're interested in Windows CE. SA would not want to partner, except they're forced to."
"I'm not holding my breath for Microsoft to dominate this space. I don't think they will. Microsoft is riding the coattails of their WebTV purchase into the set-top business," he continued. "Right now they're a bit player, but with a lot of capital. Just because Microsoft makes an announcement doesn't mean that it's going to dominate the world."
The new WebTV system won't be available on Scientific-Atlanta's Explorer 2000 set-top boxes until next year, Perlman said. Customers then will be able to download the new WebTV services to their Explorer 2000 boxes, he said.
The Explorer 2000 boxes are designed to offer services such as video-on-demand, home shopping, and Internet telephony.
Scientific-Atlanta is one of the two largest companies that sell the set-top boxes, the devices that hook TVs into the cable TV infrastructure. Set-top boxes are increasingly sophisticated computing devices, adding features such as two-way communications instead of just the ability to receive TV signals.
The deal between Microsoft's WebTV and Scientific Atlanta also will allow cable TV companies to customize the WebTV system or even use it under their own brand names, Perlman said.
WebTV shields the user from some of the technical details of surfing the Web on a computer, but it doesn't offer all the Internet features a PC can use. For example, WebTV has declined to offer support for Java programs or RealNetworks' audio and video streaming technology.