Microsoft TV unveils 'thin-client' IPG

By Jeff Baumgartner, CED Magazine
from BroadbandWeek Direct, May 6, 2002

Microsoft Corp's interactive television division today is expected to unveil a new interactive program guide that targets widely deployed Motorola Broadband-built DCT-1000 and DCT-2000 series digital set-tops - and circumvents the litigious reach of the platform's IPG incumbent, Gemstar-TV Guide International.

That's because Microsoft has an ace in the hole: a $40 million cross-licensing agreement inked in the late 1990s that allows Microsoft to use IPG patents and other intellectual property tied to Gemstar without fear of legal retribution. Microsoft has already taken advantage of that relationship with its WebTV Plus platform, and more recently with Ultimate TV.

"We've been working on this [IPG] in-house for several months," said Microsoft Director of Marketing Ed Graczyk, adding that it's a component of the company's new iTV strategy, which lessens the focus on software for DCT-5000 boxes.

In addition to building software for thin-client boxes, Microsoft is also working on more powerful Windows-based middleware and operating systems for a new breed of broadband media centers. This would include Motorola's stand-alone BMC 9000, which is designed to service multiple TVs in a single home by leveraging home networking technologies to share applications and resources with smaller, less expensive extension boxes.

Graczyk said the first version of the Microsoft TV IPG -- which will run on existing DCT-1000 and DCT-2000 operating systems and take up less than 350 kilobytes -- is complete and has been validated by Acadia for Motorola's 2000-series boxes. Acadia, he added, is presently testing Microsoft's IPG for 1000- and 1200-series boxes.

Depending on available set-top memory, Microsoft's IPG is designed to hold up to five days of program listings and handle advertising applications. The first version doesn't support video-on-demand, but Microsoft is working on integration today with SeaChange International, Graczyk said.

Although Microsoft has developed the IPG for multiple architectures, it won't port it to the Scientific-Atlanta platform unless MSOs ask for it, he added.

Graczyk said Microsoft's guide is an alternative, rather than a competitive replacement, to TV Guide Interactive, because Gemstar will receive a portion of Microsoft's IPG licensing revenue.

Still, Microsoft's IPG entrance could put pressure on Gemstar, said Forrester Research Inc. principal analyst Josh Bernoff. He noted that two classes of guides exist today: those working around Gemstar's patents, such as TV Gateway; and those that are "under a cloud" as a result of Gemstar patent lawsuits involving Scientific-Atlanta's SARA and Pioneer's Passport IPGs. Start-up iSurfTV, which has eluded legal entanglements with Gemstar thus far, has also built an IPG for DCT-1200s and DCT-2000s, but has yet to score any domestic cable deployments.

Microsoft's EPG could apply pressure on Gemstar, Bernoff added, because Microsoft, which has had more than its share of troubles breaking into the cable industry, might be willing to go extra steps to secure business with operators.

Bernoff noted that MSOs have been frustrated with the fact that TV Guide Interactive, because it has negligible competition on the Motorola platform, is not particularly responsive to operator requests.

Plus, Microsoft could provide IPG advertising as an option, rather than a requirement. "TV Guide Interactive doesn't have that option because they are selling the adds on a national level," he said.

That flexibility could give operators a reason to support Microsoft's guide, at least those that aren't tied down with long-term, exclusive arrangements with Gemstar. While AT&T Broadband falls into the latter category, MSOs in the TV Gateway consortium (Charter Communications, Cox Communications, Adelphia Communications and Comcast Corp.) have non-exclusive relationships with Gemstar, and would most likely look to Microsoft as a second source. Bernoff predicted that Cox could be the first.

Bernoff, who suggested that Microsoft get into the IPG business about a year ago, said the company could use the product as a springboard to support more advanced iTV cable services and applications.

"Microsoft is not going to make much money [with the IPG]," he added. "But this will get them talking to people and get [operators] to seriously consider the rest of their technology."

Microsoft has not announced any customers for its new IPG, but plans to meet with operators at this week's show about potential trials and deployments.