CES: Gates touts progress in digital entertainment

Microsoft chairman takes center stage at consumer products show for last time in current post

LAS VEGAS -- Microsoft Corp. Chairman Bill Gates marked progress in the company's strategy to provide digital content through a host of Internet-based channels and devices as he made his final appearance at the Consumer Electronics Show as a full-time Microsoft employee.

In a keynote address Sunday, Gates and Robbie Bach, president of Microsoft's entertainment and devices division, revealed new partnerships for Microsoft's MSN, Xbox Live and Mediaroom IPTV services in an effort to provide more video content to drive Microsoft's consumer entertainment strategy. It was the 12th keynote at CES for Gates, who plans to go part-time at Microsoft midyear to focus on philanthropic efforts through the Bill & Melinda Gates Foundation.

2008 International CES

View more stories from 2008 International CES Specifically, Gates unveiled an exclusive deal with NBC to provide 2,200 hours of live event coverage through its MSN portal of the Beijing Summer Olympics, which is scheduled to begin Aug. 8. NBC will use Microsoft's Silverlight browser technology for video playback to provide live coverage of the games on MSN along with 3,000 hours of on-demand access to events for users.

Microsoft announced other key partnerships at CES involving its Mediaroom service. The company is working with cable TV providers and set-top box makers to deliver IP-based television to consumers. Microsoft is teaming up with TNT, Showtime and CNN to provide new TV-watching user experiences through a combination of programming, Microsoft's service, and applications built into set-top boxes. For example, an application delivered through the partnerships would allow TV viewers to watch programming from a camera angle of their choice.

The company also unveiled a DVR Anywhere service for Mediaroom that will allow users to watch on-demand content from the service on a variety of devices, Gates said.

Another deal revealed Sunday will provide more entertainment through Xbox Live, the online service and community connected to Microsoft's most popular consumer electronics device, the Xbox 360 game console. A deal with MGM will allow users to purchase and download films owned by the production company to their consoles to view whenever they want to. To date, Microsoft has sold 17.7 million Xbox consoles, and Xbox Live has about 10 million members, according to company figures.

For the past several years, Microsoft has been building up a strategy to provide digital content, such as video and television programming, on a variety of devices and via various IP-based channels through several product lines, including Windows, Mediaroom, and its MSN and Live Internet portals. These products and how they will converge have been the focus of Gates' speech at CES for the past several years, but for a time it seemed the company's strategy was more vision than reality.

This year Microsoft seems to be making some progress as it both battles and partners with companies in several sectors, including consumer electronics providers like Sony, Internet companies like Google and Yahoo, major television networks and cable television providers.

But the company still has a long way to go to boost the revenue model for its entertainment strategy, which revolves primarily around selling advertising online through content delivered via its Web and entertainment platforms. Google Inc. seems firmly affixed at the top of that market, and, according to analysts, Microsoft is third behind Yahoo Inc., which is in no danger of catching up to Google anytime soon.

"The MSN/Live business has been flat for years from a revenue standpoint," said Danielle Levitas, an analyst at IDC. "No one is going to catch up with Google in the foreseeable future ... but Microsoft does need to figure out that space."

Levitas said Microsoft's plan to provide online services and related content has so far been spread out among disparate product divisions that act like "separate companies." She said it will be interesting at CES this year to see how Microsoft begins to tie all of the elements together into a cohesive consumer entertainment strategy.

Even as it enhances its Web-based content-delivery channels, the heart of Microsoft's consumer electronics strategy remains the Windows-based PC and its related form factors, and hardware partners displayed new PCs and devices during Sunday's keynote. Among them were the IdeaPad, an ultralight 11-in. notebook from Lenovo Group Ltd. Gateway Inc. and Dell Inc. also will be on hand to show off new computers based on Windows Vista, for which Microsoft has said it has surpassed the 100 million license mark for both business and consumer versions.

Other hardware partnerships highlighted during the keynote were with Hewlett-Packard Co. and Samsung, which plan to build Microsoft's Windows Media Center extender into televisions. The extender enables a wireless connection between Windows and TVs so people can view high-definition content from a Windows device on a TV screen.

Microsoft also highlighted its Milan surface computer, a tabletop computer it revealed in May that uses wireless autosync and touch-screen capabilities.

Gates also revealed some future-looking prototypes that use voice, touch and vision interface features, which Gates has long promoted as part of his concept of how people can interact with technology. One of those will be a so-called mobile navigator device, which he presented at the end of his keynote.

Copyright © 2008 IDG Communications, Inc.

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