Until now, Microsoft's strategy toward
consumer electronics and the Internet has been a slapdash affair
that did little to leverage the company's real talents.
But as chairman Bill Gates prepares to address his first
Consumer Electronics Show in Las Vegas on Wednesday, there are
signs the 25-year-old company is taking its consumer computing
strategy in a new direction.
Microsoft is not abandoning its core computer software business,
but is recognizing that newer versions of everyday electronics,
such as stereos and appliances, will have special requirements
data processing, Internet connectivity, home networking that
Microsoft is well positioned to provide.
Microsoft Expected to Unveil New Mobile Operating System
Gates is expected to introduce a new version of The Microsoft
Network's mobile operating system, which will allow users to get
e-mail from cell phones. Gates' primary focus, though, will be on
trying to sell electronics manufacturers on his vision of
interconnected VCRs, stereos, cell phones and appliances all
connected to the Internet and managed through the PC.
"This is a new class of software and a new way of connecting
people to the information they need," said Craig Mundie, group
vice president for consumer strategy at Microsoft. "The Microsoft
home, which Bill will discuss, is basically how a home would look
with all of these interconnected devices."
The rhetoric isn't new, but the approach is far different from
Microsoft's past efforts.
Microsoft's consumer electronics software, running on the
Windows CE operating system, was considered too bulky and required
too much battery power on portable devices.
Critics said Windows CE, which looked and felt like Microsoft's
larger PC operating systems, tried to do too much, but accomplished
little. Sales of handheld computers running CE lag far behind those
of the leading manufacturer, Palm Computing.
The company's consumer Web strategy was even less successful.
The Microsoft Network was originally designed as a competitor to
America Online. But while AOL has 20 million members today, MSN has
a little less than 3 million. Meanwhile, only a few of MSN's
multitude of Web sites, such as Expedia.com's travel service and
the MSNBC news site, have prospered.
"Once they wandered away from their core computing business,
Microsoft did not do well," said Rob Enderle, an analyst with the
Giga Information Group. "They don't have any other choice but to
try something different."
Focus Has Changed
The changes first started coming together a year ago, but
solidified when senior vice president Brad Chase took over MSN in
October and changed its entire focus.
"We are not a media company, but we certainly produced a lot of
media Web sites," Chase said. "That's not our strength. Our
strength is in building great software, and now we're bringing that
software to the Web through MSN."
Today, MSN is designed to provide Internet access not just to PC
users, but to users of interactive TV set-top boxes, to cell phone
users, to voice-activated computers inside cars the list goes on.
By linking a wide variety of devices to MSN, they will have a
common communications channel, Chase said. Through instant
messaging and e-mail, they will have a common language.
The latest MSN Mobile software will allow users to send e-mail,
get news and even trade stocks from their cell phone. While other
cell phones have that capability, MSN's system features a
connection to the Hotmail e-mail system, which lets users check a
single e-mail account for all of their devices.
For example, instructions could be sent from a cell phone,
through the PC, to an appliance in the home. Stocks could be traded
from an AutoPC, Microsoft's entry into the automotive market, and
the results could be read at home on an easy-to-use "Web
As for the devices themselves, the Windows CE system fades into
the background and quietly manages the device's hardware. In its
place is a simple browser which draws all it needs to know not from
the device's memory, but from the Internet via MSN.
Because of that, the devices don't need a lot of memory, are
cheaper to produce and tend to have longer battery life.
Gates will kick off the CES show Wednesday night, while Mundie
will speak Thursday to outline how Microsoft and its partners plan
to launch this new strategy.