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At Microsoft's New eHome Unit, the Core Message Is 'Integration'

29 Nov, 2001 By: Holly J. Wagner

Your DVD player may not tuck you in and kiss you good night yet, but that may not be far off Bill Gates’ vision for the wired home.

Microsoft unveiled its fledgling eHome unit this week after several months incubation, promising a division devoted to the ultimately networked home.The computer giant — the other Big Blue — has been gradually branching out from office products to home desktops and, at last, is pursuing the home entertainment market.

“The core message there is, we're working to integrate experiences, integrate devices, integrate networking, and to make the experiences simple and deliver to consumers what it is they want to do rather than focusing on the consumer themselves piecing together all the different pieces to make an experience happen,” said Mike Toutonghi, Microsoft’s corporate v.p. and distinguishedengineer-eHome Division.

While he gave up little about the unit’s plans at a Silicon Valley announcement event this week, Toutonghi admitted Microsoft’s consumer research shows consumers want simple, one-touch access to the entertainment and communications devices they already have.

“Today we have an average penetration across the U.S. of 3.2 televisions in a consumer's home [plus] significant penetration of receivers and others kinds of consumer electronics devices,” Toutonghi said. “If we tell consumers, everything you have to benefit from this must be new, we don't think that's actually what consumers want and that's not what they're telling us they want. So instead we're going to work on bridging the devices that exist with the world that we're creating over the next two, five, 10 years.”

Gates seems satisfied to let the content providers duke it out for what viewers will watch, while facilitating access to the entire basket of options.

In a report on entertainment media earlier this year, PriceWaterhouse Coopers (PwC) analysts speculated that a convergence device for the home is unlikely: “For content producers, the parade of diverse devices creates continuing revenue opportunities,” they wrote. Yet Microsoft, whose core competency is device networking, appears poised to fill the niche with bridge technology, another opportunity the PwC report observed: “Whether you consider entertainment and media to be the main event or just a sideshow on the Internet, it is the technology providers that are scooping up the admission fees.”

Jupiter Media Metrix analyst Billy Pidgeon says that’s the direction Microsoft is headed.“For getting stuff you usually get on your PC, like video, they want to be able to distribute that and get revenue. Also helps to promote their .NET initiatives,” he says. “The down side of it is really that delivering digital audio and video to the entertainment system, that stuff is often streamlined for playback on the PC. People will put up with low quality on the PC.”

Microsoft is working ahead of the broadband penetration curve, Pidgeon says, positioning itself to be the operating system when hardware and content providers work out the other issues surrounding digital delivery.

“It is broadband dependent, but not only that. Digital media is optimized for transfer via broadband and narrowband. You resort to loss of compression. With loss of compression, video doesn’t look so good and audio doesn’t sound so good,” he says. “Downloaded video would be of better quality if you have a high-speed connection. It can download in the background or overnight.”

Although Toutonghi gave few specifics, it’s clear Microsoft wants to be ready when broadband reaches mainstream America.

“For homes that do have broadband, we're seeing the usage of digital media in those homes generally double over homes that have narrow bandwidth connections. And what we're seeing…is that while there is still incredible growth in music and audio and that kind of media, we're seeing even greater growth, although smaller overall volume of usage, in video,” he said.

Microsoft Home manager Jonathan Clark demonstrated some of the features in development — which Gates often beta-tests himself in the prototype wired home. First among them was a menu display pulling together a list of video options, including what movies were available at that time via satellite, broadcast and on DVD in the home. Using one remote control, he demonstrated shifting devices from the unified menu in one click. Photo displays function similarly on a separate list, as do music devices (including “digital music that we’ve ripped and put on our network,” Clark noted).

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