Microsoft STB Upgrade Due in Several Months, Graczyk Says
Microsoft, trying to sell more TV products, will unveil a set-top box software upgrade within months, Microsoft TV Mktg. Dir. Ed Graczyk said. The firm is “sharing them [the enhancements] on a private basis with [cable] operators,” Graczyk told us, declining to describe them. Comcast is the only major U.S. cable operator to deploy the current version, 1.7 (CD May 21/04 p10).
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As yet, Microsoft isn’t making a headlong bid to add cable customers. Several analysts expressed skepticism the company can conquer the STB market in the manner of its operating system with PCs. Microsoft’s first cable priority is helping Comcast deploy to all digital customers in Wash., Graczyk said. The next step is to sell more Foundation Edition licenses, then IPTV, he said. “We frankly haven’t been very much actively marketing the Foundation product to customers in the U.S.,” he said, but “we've been talking to the cable operators for a long time.” Foundation Edition features include digital video recording using an interactive program guide and a way to search for high-definition TV programs.
The Comcast rollout, despite glitches, generally is going smoothly, said Mark Hess, senior vp-digital TV business & product development for the cable operator. The company will decide whether to use Microsoft in set tops and headends in other markets after analyzing results in the Seattle and Tacoma areas, he said. “There is still a little TBD in whether we'll exercise… the rights to put this in up to 5 million set-top boxes,” which Comcast has paid for, he said. “We can judge how much customer satisfaction is up, are more people using VoD because of this, more DVR, more HDTV? If all that proves to be true, then certainly we're going to look to expand.”
Executives at other cable firms were mum on the Microsoft product. Charter and Cox declined to comment on prospects for using Microsoft. Officials at Time Warner and Cablevision weren’t available to comment. SBC remains committed to launching pay TV by early 2006 in a project that will use Microsoft IPTV, a spokesman said. “The project is on track, according to our very specific milestones,” he said. “As with any new technology and multiple vendors, it is a complex project.”
Microsoft, which in previous years failed to sell software to some cable operators, faces fresh marketing challenges, analysts say. “They're going to continue to have a hard time,” said Jefferies & Co. analyst Robert Routh: “They've tried to break into the set-top box market for years -- they've invested in almost all of the cable companies.” Cable consultant Steve Effros predicted challenges ahead for Microsoft’s IPTV product: “It’s going to be a long time before an existing system is going to switch over totally… Our equipment is working just fine.”