Microsoft Forges First Real Interactive Television System

Article excerpt

When Microsoft snagged a little Silicon Valley start-up called WebTV Networks for $425 million in April, the acquisition was duly noted, but no one seemed to completely understand the attraction.

The company, which sells World Wide Web and e-mail access delivered via television sets rather than desktop computers, had fewer than 100,000 subscribers when the deal was struck. As one might expect from the first product in a new category, the WebTV Internet Terminal set-top box was slow, expensive (more than $300) and awkward to use. It was widely assumed that Microsoft was buying little more than patents to a promising technology.

Instead, as the company's new WebTV Plus Receiver begins appearing in retail outlets, it is apparent that WebTV is now central to Microsoft's drive into the global market for interactive digital media. At $299 for the device and $19.95 a month for the service, the WebTV Plus Receiver is a significant improvement over its predecessor and much more advanced than its competitors -- the most notable of which is the Network Computer from Network Computer, a company owned by two Microsoft archrivals, Oracle and Netscape Communications. Though WebTV Plus Receiver's significance was largely overlooked when it was announced in September, the product has redefined the genre it created. Unlike the original Internet Terminal (which the company now refers to with a twinkle in its eye as "the Classic" and sells, with rebate, for $99), the Plus identifies itself as much with television as it does with the Internet. In fact, the product's long list of improvements begins with a TV tuner -- which, among other things, allows WebTV to create a sophisticated interactive program guide for anyone who uses the product's set-top box in conjunction with cable television service. Another intriguing feature is the Plus' enormous 1.1 gigabyte internal hard drive, which WebTV says can store up to 12 hours of compressed video and other digital material. Steve Perlman, president and co-founder of WebTV, says the hard drive will be used to store updates of Web pages that customers look at most frequently, so those pages can be called up more quickly. In conjunction with the Plus' privacy and security software -- 128-bit public key encryption technology, a type nearly impossible to crack, is built into every box sold in the United States -- the hard drive will enable the system to securely capture and store all sorts of digital media, from independent films to video games to music, on a pay-per-use basis. The Plus also has a new, custom graphics chip that has completely changed the look and feel of the WebTV service, making it behave much more like a television than a computer. Just as important, the chip is programmed to tidy up every Web page it displays: It increases the type size where necessary, reformats pages to fit the shape of a TV screen and so on. …