Early on in my career at Microsoft a battle opened up between Oracle and Microsoft over who was going to deliver on-demand TV. The idea being that the customer could control their viewing experience and see the content they wanted delivered when they wanted it. Microsoft started up a project code-named “Tiger” to deliver this new service. It would launch the start of a new era of something that has since seemed destined to failure within Microsoft, but not before a lot of optimism along the way.
At this time in the industry the internet was not in play and the idea of IP delivered services through digital content was still a long way from reality. The early tests were humorous from what I heard through the grapevine. It literally was a customer made a request (not sure how) and someone in a back room a person found the video, ran it to the VCR and hit play. Anyone ever see the movie, “Broadcast News“? . Around this time Microsoft CTO Nathan Myhrvold was espousing the next big thing in computing which was going to be interactive TV. He was not on board with the whole internet wave at the time. In his defense interactive TV is happening and will continue to morph in the coming years, but the internet will be a huge part of the equation. The interesting thing at this time was this was really a “verbal” battle between Oracle and Microsoft as to whose database was going to store and deliver all the content. At the time Oracle’s database technology was way ahead of Microsoft, so upon reflection it was probably a good thing for Microsoft the internet came along to help settle or at least delay the debate so Microsoft could catch up.
As the internet began to take hold it was apparent that the idea of Digital TV and user self-determination was only going to get stronger. There were numerous “small” victories along the way for Microsoft TV. In 1999, and as was typical during that time, Microsoft invested to take a small equity stake in Portugal Telecom, because you had to pay to play. A big press release was done with Steve Ballmer to highlight this huge win for Microsoft TV. It was around this time at the yearly Microsoft Global Sales Summit I heard from the Microsoft TV Product Group. The presentation was done by a young program manager named Alan Yates. He followed the Windows Mobile presenter. He was a talented presenter and I remember he started with a question, “How many of you own mobile phones?” About 90% of the hands went up (this was 1999). Then he asked “How many of you own TV’s?”. The crowd laughed as everyone’s hands went up. He then proceeded to talk about Microsoft’s plans and the future potential of interactive/digital television. The future potential of a new market is an easy way to get people excited about a green future, I am talking dollars not the environment. Microsoft people really gravitated towards future potential. In those days any future potential in technology was believed to be Microsoft’s market to own. Based on our track record at the time it was a sure bet we would succeed. It was our birth right.
Fast forward to 2005 and a new strategic direction in Microsoft TV land. Microsoft and AT&T signed an agreement to deliver uVerse, which is AT&T’s entry into digital TV based on Microsoft’s IP TV technology. I saw some initial demo’s several years ago at the Microsoft company meeting. They did a demo using baseball as an example. Being a big sports fan I could relate. They had a game on and up at the top they had three smaller windows. When something big happened in the game I was not focused on I could at the click of a remote control button (you can do all sorts of things with technology, but take a man’s remote away he is no longer a man), I could bring that particular game into the main screen and demote the game I am watching to a small pane. It was paradise. There has been a lot of work done with AT&T since the announcement and Microsoft is getting money from AT&T through the deal. However as far as I can tell the service is still not available in many areas. It’s not available in mine. To be fair the challenge is not Microsoft’s alone. The Telco providers are still learning this business and beyond the technology there are a lot of relationships with content providers (Disney, Time -Warner, News Corp etc..) that need to be managed. All this being said though there are other deals for IPTV a vast majority of Microsoft’s eggs are in this one basket. As ATT goes so will Microsoft TV.
With the recent announcement by Google of a joint pact with Sony and Intel, the idea of digital TV and user self-determination may be poised to take a huge step forward. After a trip abroad I am increasingly of the belief that Google’s acquisition of YouTube will pay huge dividends for Google as digital TV becomes universal. By universal I mean that Television programming will not only be more under the control of the end-user, but will be accessible from a multitude of devices not connected to your living room. Today you YouTube experience is pretty much everywhere but your living room. Google is big on the media and publishing space and I am sure will leverage those relationships to further their quest into ad revenue through media content, not just search. It is a challenge for Microsoft in that the Microsoft historical view is we will create this great technology and then partners will deliver great solutions. What you are seeing in the industry are companies who take technology to leverage existing relationships. A good example is the Amazon Kindle. Amazon had relationships with all the publishers so they struck deals to deliver content to the device. Microsoft had “reader” technology ten years ago which they never were able to monetize. Microsoft wanted partners to create the next great technology trend using Microsoft’s technology. It’s early and I can only guess at what Google will eventually try to do, but if they can get ad revenues from an internet TV service that would be another huge revenue source.
Looking forward Microsoft has developed a strategy they call the three screens approach. The three screens being the PC, television and mobile phone. On Microsoft’s part this represents some really good thinking, and if you think about what Google is doing they are more or less following this vision. Now the real focal point will be on execution. There are certainly big challenges in the way. For Microsoft it starts with mobile. I recently chatted with an old friend in silicon valley and he said as far as mobile development goes in the valley, Windows Mobile is non-existent. In addition to ATT uVerse the launch of Windows Phone 7 has to develop excitement. If it falls and Microsoft has to wait until the next release the industry will have moved on and they will be too late. Another area that will be interesting to follow is Apple and their TV initiatives. Apple has released products for the TV space, and though the initial reviews of Apple TV were middle to not so good, given Apple’s hot hand, fanatical community, and great ability to generate “buzz” via sales and marketing it will be interesting to see if they come back with a stronger offering to start tying the three screens together. They have been successful with the desktop, over the top with the mobile phone and now just have one screen to go with a browser to tie ut all together.
Given the start stop history of Microsoft TV the next few years will be critical to see if it has a future. The IPTV solution cannot fail. If Microsoft had to change strategic and technology directions the window of opportunity may pass. In technology waves come and go. If you catch a wave and can ride the crest success will not be far behind. However if you are slow and are late when the wave crashes you will be pulled under and thrashed about trying to come back up for air.
Good Night and Good Luck
Hans Henrik Hoffmann June 10, 2010