Microsoft plans to sit inside your refrigerator

The company will report a deal with chip makers to modify the Windows CE source code and develop customized chips for running embedded versions of the OS.

Microsoft, again trying to branch out from personal-computer programs, finally is making some progress in the embedded software that runs everything from factory robots to "smart" refrigerators.

At a conference in Las Vegas Tuesday, Microsoft (msft) Chief Executive Steve Ballmer will announce an alliance with several semiconductor makers that will allow them to develop customized chips for devices running embedded versions of Microsoft's operating systems.

Microsoft plans to allow chip makers, including Intel Corp., MIPS Technologies Inc. and ARM Holdings PLC, to modify the "source code," or software program, used to create its Windows CE operating system. Though Microsoft has allowed selected developers to see CE source code in the past, never before has the software company let them alter it, said a Microsoft spokesman.

Ballmer also is expected to discuss some new deployments of Windows CE and the embedded version of Windows NT. They include plans by Bally Gaming & Systems to run casino slot machines on Windows NT, and an effort by Scanz Communications Inc. of Santa Monica, Calif., to put Windows CE into hand-held devices that could allow football referees and coaches to watch instant replays on the field.

Embedded software refers to the trend of putting microprocessors and other chips, and the software that manages them, into myriad products to help add features and communications capability.

Rival Sun Microsystems (sunw), for example, recently demonstrated ovens that use Java software to display step-by-step cooking instructions on a display panel. Smart refrigerators, for instance, might sense when a consumer runs out of eggs, and then electronically put in an order with a delivery service to replenish them, Microsoft officials say.

But Microsoft has struggled so far in the field, which has been dominated by players such as Wind River Systems Inc. and Palm Inc. One reason has been the relatively large size of Microsoft's programs, and a perception that the programs were unreliable.

"Nobody's excited about blue screens and rebooting ... and that's part of the Microsoft legacy," said Curt Schacker, Wind River's vice president of marketing. He points out that his company's software has been used in demanding environments such as antilock braking systems and the Mars Pathfinder.

Microsoft's credibility began to improve last year, when the company released the newest version of Windows CE and began using it in its Pocket PC hand-held organizer. And Bill Veghte, Microsoft's vice president for embedded and appliance platforms, argues the company's embedded software is perfectly reliable.

Microsoft's Veghte said his group counts 450 hardware-developer partners, up 125% since just September. The group's revenue is up 300% for the first six months of Microsoft's current fiscal year, he said, though he declined to disclose the size of the revenue base. (Microsoft didn't make research-firm Gartner Dataquest's list of top 20 embedded-software companies, based on 1999 revenue.)

Microsoft is relying on its familiar marketing leverage to push offerings. Just as Microsoft has used its ubiquitous Windows desktop software to promote new products such as its Web browser, the company is pitching embedded products as natural extensions of desktop Windows and stressing the ways in which the systems can work together for better performance.

Microsoft's "proposition to the CIO or whoever at Bally's would be, 'You're using Microsoft on your front end. Why don't you put Microsoft on your back end as well?,' " suggests Daya Nadamuni, an analyst with research firm Gartner Dataquest in San Jose.

Indeed, officials at Bally Gaming, a unit of Alliance Gaming Corp., are awaiting gambling regulators' approval for new NT-powered slot machines that they say will link into existing computer systems, such as accounting and security. Using NT also will allow them to buy off-the-shelf, Windows-compatible graphics packages to develop new types of slot-machine games.

"When it is approved, it will become our platform for 100% of our machines," said Robert Miodunski, Alliance Gaming's president and chief operating officer.


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