How Microsoft loses the TV space

How Microsoft loses the TV space

Summary: Google yesterday officially confirmed the existence of Google TV, a "not so secret" project hints of which have existed for quite awhile. A number of key Microsoft engineers wandered into permanent positions on Google campus while I worked for Microsoft as part of its Mediarom division (Google's Mountain View headquarters is less than a mile from Microsoft's large office in Silicon Valley).


Google yesterday officially confirmed the existence of Google TV, a "not so secret" project hints of which have existed for quite awhile. A number of key Microsoft engineers wandered into permanent positions on Google campus while I worked for Microsoft as part of its Mediarom division (Google's Mountain View headquarters is less than a mile from Microsoft's large office in Silicon Valley). Of course, it didn't take a rocket scientist to see that Google had designs on video entertainment. YouTube is the single most popular destination for Internet video. Much as the iPod docking interface is the standard around which digital music peripherals are built, YouTube integration is a baseline feature in many consumer-oriented video products.

Will Google TV change the TV space? Though details are still to be digested, I think it has a better chance of doing so than the Apple TV experiment, as innovation isn't confined to a Cupertino lab (the same dynamic that will lead to Android's eventual triumph over iPhone, in my opinion), and the service orientation of TV entertainment plays more to Google strengths than Apple's. In my opinion, Google TV would be better served getting a few carriers to offer their customers Set-Top Boxes (STBs) that run the Google TV software. Though the barrier to entry is certainly lower, cost-wise, than was the case for Google's "direct to consumer" Nexus One cell phone experiment, I'm not so sure consumers will race to install their own web-enabled STB. But, Google's strategy is to get OEMs to build devices that use their software, and it is those OEMs who have the carrier relationships that will put boxes in customer hands. It doesn't hurt that, like Android for mobile phones, Android for television is 100% free as in cost (and free in the sense that makes Richard Stallman's smile visible through his beard).

But, until I get my hands on the software (and I will), I'll put off a deeper analysis for a later day. In the meantime, I'll give voice to my frustration with Microsoft's TV efforts. From a television standpoint, I feel that Microsoft is in the same position today that their mobile division was in the day after Apple's announcement of the iPhone (or at least shortly before, as the success of Google TV is a definite "maybe," while I had a hard time believing the iPhone would be anything but successful). All it takes is one savvy competitor with the right product to transform billions in TV-focused investment into so much oil gushing across the seafloor in a certain warm southern body of water.

Microsoft has been focused on the potential of televised entertainment for a VERY long time. Some theorized that Bill Gates almost missed the dial-up Internet boom in 1995 because he was too focused on interactive television service which required broadband network speeds. A former manager at Mediaroom worked on one of those early projects in the late 90s. He recalled big stacks of 500 MB drives (the biggest at the time) that cost ungodly sums of money and had a hard time keeping up with streaming requirements, something that would have made it difficult to build a Video on Demand (VOD) system of sufficient size and video quality. Microsoft also bought WebTV in the late-90s, a startup focused on bringing the Internet to televisions, many of whose engineers served key roles in Microsoft IPTV (later renamed Mediaroom) once that project got off the ground.

Today, Microsoft has multiple pokers in the TV fire. There is Media Center, a "television atop the PC" concept that is notable for its customizability. There is Mediaroom (formerly Microsoft IPTV) that offers an end-to-end infrastructure targeted primarily at telecommunications companies with broadband services and the need to compete with cable. XBOX, though not strictly a "televised entertainment" play, is attached to the TV and offers video rentals through the XBOX Live store as well as access to streaming services like Netflix. One could argue that Windows CE is also a player, given the existence of TV-oriented add-on packages designed to encourage third parties to build STBs atop Windows CE. That, however, is a bit like calling LEGO an architectural firm because someone built a house out of LEGOS. (UPDATE: Talkback participant basharkokash noted Microsoft's new End-to-End Platform based around Silverlight and IIS Smooth Streaming; as I've noted before, I think Microsoft should make Silverlight their default interface on ALL devices, so this is a notable addition;  I also think Scott Guthrie - a key backer of that initiative - is one of the smartest strategy guys currently working at Microsoft).

That's a lot of efforts, though to be fair to Microsoft, each group approaches the market from slightly different angles. Given how early Microsoft was to the space, striking off in multiple directions makes some theoretical sense.

On the other hand, I think one of the fatal flaws in post-millennial Microsoft is its inability to move with a coherent purpose across product lines, or even product streams. As I've discussed in past articles, Microsoft has a history of letting different teams attack the same problem simultaneously. In theory, parallel effort will dig up useful detail that can only be gleaned by attacking the problem in more than one way. In the end, the winning bits of all streams can be merged into a common whole, allowing Microsoft to cover more ground than if they put all their eggs in one technology basket.

Can, however, doesn't mean such a merger WILL happen, particularly when control over billions of dollars is at stake...just ask Enrique Rodriguez. The reality is that "mini-companies" within the Microsoft whole are a poor substitute for real-world competition. Internal companies don't face the same consequences as companies that fail to catch on in the open market, and thus are shaped by different incentives. There are fewer gains to be derived from compatibility with other groups, or compromise for the sake of consistency. Code equals power at Microsoft, and given that engineers who love to code (and Microsoft is full of them) would perform a bumper to bumper redesign of a Ferrari if given half a chance, there is a huge impulse to amass as much code uniquely customized for JUST your project as possible. Compatibility and consistency suffer as a result.

Inter-team politics can grow somewhat silly. Media Center was "the enemy" to many in Mediaroom because it had the potential to be a real existential threat to the existing home-grown client, particularly as it had a vastly more powerful User Interface framework than anything that existed, at the time, within Mediaroom.

XBOX is the most frustrating part of the Microsoft TV strategy, at least for me, as someone who wants Microsoft to embrace their potential and, along the way, justify their investment in so many market segments. I love my XBOX, but I will simply never understand why the powers in control of the only TV-attached product made by Microsoft thinks it makes any sense to restrict the network access of custom applications (well, unless you are Facebook, Netflix, or another favored company). I really have no problem with paying the XBOX Live yearly subscription fee. Just give third parties the ability to write TRULY network-aware applications so that they can build something unique in the living room.

The wrangling and resultant duplication of effort slows things down, making divisions slow to adapt to change. Such slow adaptation was the thing that brought down Windows Mobile, leaving Microsoft in the position of having to completely reset their entire mobile phone strategy. Given how fast technology moves these days, I think they will have even less time to adapt in the TV space.

Do I think Microsoft can change things? Maybe. I have high hopes for Microsoft's plans to embed Media Center into TVs. I still think that Media Center is a great product, something which should have been leveraged everywhere Microsoft was doing anything in TV (which means: teams involved in the space should not have been allowed to avoid compatibility with it). Does this mean that Embedded Windows (which I presume is what will be used for the embedded version) can truly be deconstructed to the point where it is cost-effective to do this using the existing Windows code base? I sure hope so.

Few who has read anything I have written would confuse me for an enemy of Microsoft technology. As a development platform, my preference is .NET, and when I choose an operating system, I favor Windows, PC or otherwise. But it's hard to ignore Microsoft's surprising capacity to squander its first mover advantage. Five years ago, Microsoft could honestly say they were the only company in cell phones, TVs, PC / Servers, and everything in between. Today, that is no longer the case. Cross-device advantages that should have been leveraged by Microsoft are now being pursued by a company that was non-existent a little over 10 years ago (Google), and another that almost went out of business around the same time (Apple).

It only took one iPhone to turn Microsoft's mobile strategy upside-down. I think the same thing applies to television, and that is how Microsoft could lose the TV space.

Topics: Hardware, Google, Microsoft, Mobility

John Carroll

About John Carroll

John Carroll has delivered his opinion on ZDNet since the last millennium. Since May 2008, he is no longer a Microsoft employee. He is currently working at a unified messaging-related startup.

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  • Microsoft needs to loose all

    Everything, loose in the server, OS, app, consumer space.

    MS needs to close up and give the $$ back to the shareholders.
    • Thanks...

      ...for adding nothing to the conversation.
      John Carroll
    • RE: How Microsoft loses the TV space

      @itguy08 why do you worry when fanbois like you haven't paid a single dime to Microsoft.
      Ram U
    • RE: How Microsoft loses the TV space

      @itguy08 why do the anti-anything brigade show an utter inability to spell? MS needs to "loose" all? I assume you mean "lose". Are you suggesting there are screws "loose in the server"?
      Bob G Beechey
    • RE: How Microsoft loses the TV space

      @itguy08, I just have to say, you made my night. Thanks for the laugh.
      The one and only, Cylon Centurion
  • What about Silverlight?

    You mentioned nothing about Microsoft End-to-End Platform Powers Next-Generation Silverlight and IIS Media Experiences Across Multiple Screens
    • Good point

      @basharkokash Yes, Silverlight on every device (and on SOCs) IS very interesting. Scott Guthrie may yet make Microsoft truly relevant in TV.

      IIS Media Services, though, likely will be viewed by Mediaroom as a competitor to its backend (creating a political snowblind that might block use of it across Microsoft product lines).

      But, I've long thought Scott Guthrie should be given Steve Jobs-like powers within Microsoft. He clearly has vision.
      John Carroll
      • RE: How Microsoft loses the TV space

        @John Carroll I agree.
        Ram U
      • RE: How Microsoft loses the TV space

        @John Carroll <br> plus 1 to giving supreme powers to "the gu", he is the man.
  • At least they have a commercial now...

    Did you see that one?
  • It has become abundantly clear to me that...

    1. Ballmer lacks vision, which is why they have all these competing units, hoping that something great will emerge. As long as he is in charge, MS will struggle in all these new markets/technologies.

    2. MS sells SW, while the real action is in free SW. MS cannot easily compete with "free" in emerging categories. Why would anybody pay MS for mobile and home management/entertainment SW when Google gives theirs away.

    3. Despite Ballmer's "5 things that matter", MS is too tied to their cash cows to come up with really disruptive solutions/technologies. That may in the end be their undoing.

    4. Google has the time, money and vision to keep growing their search/advertising empire. They develop and give away disruptive and new segment SW and watch their reach grow.
    • The difference between MS and GOOG


      Is that MS has the quality, while GOOG is stuck in perpetual beta. I'd rather pay for something I know has been tried and true, rather than mess around with GOOG's nonsense.
      The one and only, Cylon Centurion
  • AT&T UVerse uses Win CE

    for their STB's and I love their service, I do wish they were MCE compatible though, MCE is great and I use it almost every day but HD cable is still a big issue, as is Dish and DirecTV compatibility. You are right though, MCE has been out since 2002-2003? MS was one of the first to integrate it but never really pushed it.
    • I think

      ...the Mediarom STB is better than existing alternatives, though that isn't saying much. Bill Gates has said that when he saw the iPhone, he smacked his head and thought "we didn't aim high enough" (I am paraphrasing, of course). I think the same thing will occur at some point for Mediaroom.

      All it takes is one really good competitor to overturn the apple cart.
      John Carroll
  • RE: How Microsoft loses the TV space

    Not to nit-pick but you said near the end, "ive years ago, Microsoft could honestly say they were the only company in cell phones, TVs, PC / Servers, and everything in between."

    I think Sony has Sony/Ericsson, Bravia's, VAIO's, Playstation, Movies, TV, etc. Pretty much into everything and more than M$ aside from software.

    Now for my addition to the conversation. I love M$ for their new take on software. We all saw how poorly they ran their Monopoly for years. (ie. Office, Frontpage, Windows, etc.) They were just controlling everything PC-softwarewise and did little to improve on the said IP's. Recently though they have remedied that situation, I would say within the last 3-5 years. But, it is the same old M$ at play again. Entering every market just to take a bite out of it instead of improving it. They could have entered their 2nd generation of gaming consoles with something improved drastically featurewise and hardwarewise. They decided to go cheap with a money gouging business model. They have slowly remedied this situation as well, but that is the problem. Instead of just playing catchup, they should be trying to innovate. I have heard the new Silverlight model is something to drop your jaw over, but I will wait to see. I just can't trust a company that doesn't try to do something new/different. That is why they will always have major flaws in their products, because they copy others instead of lead the pack. When they start to innovate, we will see the true power of M$. Until then we will just have to get our fixes for BEST tech from other sources.
    • Fair point

      @joostin Okay, I guess among software companies Microsoft was one of the first (Sony is more a hardware company).

      Regarding Microsoft's entry into new markets, I have no problem with that. My problem is their lack of sufficient ambition. XBOX should be trying to redefine the living room. Instead, I think it has been solely focused on beating Sony, leaving room for Nintendo to innovate beyond the traditional game console concept (Natal is going to be interesting, though). Ditto with Mediaroom, which I consider to have been insufficiently ambitious (and ridiculously incompatible with other media products produced by Microsoft to boot).
      John Carroll
  • What is lacking is an integrated product

    I agree with most of what you said but if you combine several microsoft products such as the XBOX and a Windows Home Server you can get DVR functionality, media streaming, direct web streaming (youtube, hulu, etc). The problem of course is that this is only possible through setting up all these products plus a number of 3rd party applications which requires tons of configuration, not something you can sell to the average consumer. This speaks to me of MS still seeing themselves in many ways as platform providers instead of product developers, at least in this space, but there is a certain coordination among the different product groups (hence the ability to integrate the different products to achieve the described functionality).
    I would love to see a simple unified product that would address TV viewing, or at least why not opening up the XBOX SDK for application development (XNA only allows you to develop games) so that 3rd parties can offer this directly using the XBOX as a platform?
  • Designers, designers, designers

    I think MS needs to expand its design organization, and ensure that top designers spearhead the shaping of front end consumer and business products, into truly inspiring, coherent user experiences. (I love the way Windows Phone 7 is developing. I think MS is doing a great job in this area!) An important problem for MS, is that it has a strong developer community, whose members tend to see things very technically. This worked well for MS in its early to mid-years, because it products were primarily sold to technical individuals. But the market place dynamics have radically changed since then, and the overwhelming purchasers of PC products in the consumer market, are ordinary consumers - who are not particularly technical. That is an important reason Apple is doing well - where it didn't do so well 10 - 15 years ago. Designers put a huge amount of thought into consumer wants, and into design functionality and aesthetics. This is needed; but many developers just don't get or fully appreciate it.

    I believe a main reason for MS' limited success in the TV space, has to do with a lack of coherent design leadership. There needs to be a strong design organization at MS that spans all front end / user interface efforts (including on consumer electronics), and these guys should exhaustively ensure new breath taking user experiences are continually delivered to MS customers, and (again) that all these great experiences are coherent. I believe this would significantly increase MS' success in its various consumer space efforts, and would help drive the updates of its products in the business space.

    John Carroll's idea about opening up the Xbox so that developers can extend the user experience sounds like a great idea to me. MS could make money from an app store, and the above would add value and help differentiate the Xbox from the competition. <a href=;1_80159_1545928>I also think it might be prudent for MS to get more into the hardware business</a>, and supply the guts for a range of consumer electronics, which incorporate (from the MS supplied guts) highly slick user experiences, hardware suppliers could easily customize into finished products. (The advantages for hardware manufacturers, is that they wouldn't have to spend resources on UI or software development, and a lot of hardware integration work. [The equivalent of Rapid Application Development for hardware manufacturers.]) MS could also use these devices to drive adoption of its Zune network, as well as application ecosystems and app stores.
    P. Douglas
    • RE: How Microsoft loses the TV space

      @P. Douglas I agree regarding a central authority for design at Microsoft. That should be matched by a central development authority that enforces common development technology across product categories. Such a group would need to be involved early on in product planning to prevent accidental duplication of effort. I can think of a number of cases where that should have happened in Mediaroom.<br><br>Central authority is critical to the functioning of any company. What made Windows 7 a success? Julie Larson-Greene's power over the design (the same thing she did with Office 2007). <br><br>Companies shouldn't attempt to organize themselves like the open market. Creating the incentives that guide the open market market are impossible within the confines of a single company. The only reason Microsoft thinks it works was that it SEEMED to back in Microsoft's golden days. It only seemed so, however, because Bill Gates imposed a central order that was easily overlooked (that, and Microsoft was a much smaller company back then).
      John Carroll
  • They've Lost It For Sure!

    But I do think they can get it back. They need to leverage XBOX and open up a central app store for Windows Phone 7, PC/IE and XBOX apps. XBOX seems to be their biggest advantage moving forward since they are pumping so much money into live entertainment like 1 vs 100.

    But I'm also a little skeptical because (as a previous commenter has mentioned) Ballmer is at the helm of this company.