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Microsoft's Moves into the Set-Top Space

Last week Microsoft Corp. and Cable Television Laboratories Inc. grabbed headlines by announcing an agreement for Windows Media Center-based PCs to be built with a one-way CableCARD module. News coverage has focused on how this deal will enable consumers to 'watch cable TV on their computers,' but there's much more to it for Microsoft. The entire purpose of Windows Media Center is to break out of the traditional 'computer' model. Microsoft's play is to leverage PC hardware and software to enable entertainment-centric devices and applications. In one sense, it converts the PC platform into a virtual set-top box and home media server, and television sets become monitors. Windows Media Center software includes a television program guide that allows users to record and play TV programs. It also plays DVDs, as well as downloaded audio or video content, or personally created content, like photos and videos. Microsoft even offers a Media center remote control. Recorded television content can be transferred to laptops or Portable Media Center devices to be viewed on the go too. In the not-too-distant future, Windows Media Center products will undoubtedly ship in an actual set-top box form factor that is sold at retail. Until then, the release of Microsoft's new Xbox360 game console yesterday will help bridge the gap. Using 'Media Center Extender' technology and a wired or wireless home network, an Xbox360 can be connected to a Windows Media Center PC, so all the content on that PC can be accessed through the TV linked to the Xbox360. In another glimpse of things to come, LG has introduced the first digital video recorder (DVR) with the Microsoft Program Guide, called the LG LRM-519. Like the Xbox360, the LG DVR can also be connected to Windows Media Center PCs. It is important to note that Microsoft was only able to gain approval for a one-way CableCARD from CableLabs. When inserted into a PCMCIA slot in a 'digital cable ready" device, like a TV or DVR (or now a PC), a one-way CableCARD provides the conditional access and decryption needed to watch cable programming without a set-top box. However, one-way CableCARDs do not allow users to access pay-per-view, video-on-demand (VOD) or electronic program guide (EPG) services. So, until Microsoft gets two-way approval from CableLabs, Windows Media Center devices will not be able to act as true set-top box replacements. But this initial deal paves the way for Microsoft to clear that hurdle in the future. And in parallel, with Microsoft supplying software for IPTV set-tops for telcos like SBC (now AT&T), that day may not be far off.
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