The current issue of BusinessWeek has a nice overview of Microsoft's efforts in IP TV (sending television feeds to a set top box over a broadband connection). It's a bit skeptical, and focuses on how Microsoft has bent over backwards to address the needs of partners. For example, Microsoft's brand does not appear on the set top box, and the boxes don't even need to run a Microsoft operating system.
I saw a demo of the system at CES, and BusinessWeek leaves out an important element of the story: it's really, really cool. I suppose cable operators adopting this system could simply force their customers to upgrade, but new entrants such as phone companies and alternative broadband providers will need to provide consumers with a reason to move; simple pricing bundles will only go so far.
Microsoft was running a live demo off to the side of their main consumer booth - I literally stumbled into it on the way to a different meeting. What most impressed me about the system was not the alternative angles, more interactive VOD, or even the concept of moving the DVR from your living room back to the service provider. What impressed me about the demo was that it didn't feel like much of a demo at all: image quality was spectacular, and reactions to user input was instantaneous - far faster than changing channels on a satellite STB or HDTV tuner. The main window contained what appeared to be full HDTV, with alternative feeds around it. The user interface was refined, all onscreen graphics were in high resolution, and the EPG (Electronic Programming Guide) appeared simple enough for anyone to use. Feeds switched from one to the other with smooth transitions.
OK, one feature did stand out: easy to use PIP (Picture in Picture) without need for multiple tuners. Nobody actually uses PIP in the real world because setting it up is too complicated. But with "Microsoft TV IPTV Edition" (seriously, who comes up with these horrible names?) you can use PIP to keep an eye on multiple sports games in progress at once. If Microsoft solves the naming problem, they've got a real winner here.
-avi
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