By John Markoff
N.Y. Times News Service
SAN FRANCISCO _ The unobtrusive cable control box that sits atop many television sets is about to become a new battleground for the nation's computer, telephone and cable television companies. The ultimate prize: control of the access to all the video entertainment and new types of electronic information that enter and leave the home.
The struggle will move to a higher plateau, perhaps as early as next week, when three companies each dominant in their fields _ Microsoft, Intel and General Instruments _ are expected to announce that they are jointly developing a set-top device that combines the functions of a cable converter box and a personal computer, according to industry executives. The three companies are still working out final details of their agreement.
The new device is expected within a very few years, when cable television systems will probably offer as many as 500 channels and set-top units like the one envisioned may be the portals through which virtually all video signals flow.
The power of a personal computer will be helpful not only for selecting from all the movies and countless clones of popular television programs that are sure to evolve.
But the computer might also make possible "interactive" television tasks like assembling newscasts tailored to a viewer's particular interests, browsing through video versions of the encyclopedia or summoning on-screen shopping services in which the models in the Eddie Bauer or Victoria's Secret catalogs parade their wares at a viewer's command.
"There really aren't any bigger battles than this," said Mark Stahlman, an industry analyst at New Media Associates in New York City. "Telephone companies, cable operators and computer manufacturers are racing into your bedroom."
Besides Microsoft, Intel and General Instruments, a range of computer makers are anxious to form partnerships with both cable and telephone companies to attack the new interactive market.
In addition to Apple Computer and International Business Machines Corp., which is each still looking for a teammate, video game makers such as Nintendo and Sega are each exploring relationships, and 3DO, a Silicon Valley start-up company with an advanced video player, is also looking for alliances.
Each company vying to establish the industry standard for the devices that will control all this action is buoyed by the knowledge that whoever seizes control of the set-top stands to make billions of dollars and help determine what type of information pulses into and out of millions of homes.
But of the teams formed so far, the one made up of Microsoft, Intel and General Instruments may be the most powerful and seems closest to bringing a product to market.
General Instruments, a leading provider of set-top cable television decoders, has already been at work with the largest operator of cable systems, Tele-Communications Inc., to create the data-compression technology that Tele-Communications has said will make it possible to squeeze 500 channels into a single cable by 1994.
And now, Microsoft, which dominates the personal computer software market, and Intel, the world's largest computer chip maker, will cooperate with General Instruments in designing the computerized set-top device that will contain a version of Microsoft's popular Windows software and be powered by Intel's 386-series personal computer chip.
A model geared to today's cable systems, priced between $250 and $300, is to be available later this year. Next year, a more advanced version will add the digital-compression technology. In both cases, the set-top device will be operated with a remote-control unit that is similar to control devices used for today's cable boxes and televisions.
"Interactive multimedia is just a wild frontier," said Bishop Cheen, a senior analyst at Paul Kagen Associates, a media research firm in Carmel, Calif. …