Microsoft TV Group Eyes New Market

Microsoft Corp. has described its Mediaroom IPTV offering as a way for the software giant to expand its reach into the living room but now the company also says IPTV is a chance for it to gain a new market in telecommunications operators.

"Microsoft hasn't traditionally operated in the backbone infrastructure of the carrier," said Christine Heckart, general manager of Microsoft's TV group, speaking on a Webcast from the Pacific Crest Technology Forum in Vail, Colorado, on Tuesday. "Mediaroom is really the first time in that business."

Mediaroom is built on other Microsoft products so every time the company sells the package to an operator, it is selling other Microsoft offerings like SQL Server. "Hopefully that gives the service provider confidence that they can base their networks on server infrastructure," she said.

While Internet companies like Google Inc., Yahoo Inc. and Microsoft's own MSN operate "hugely scaled" networks based on servers, telecommunications operators have traditionally relied on special-purpose hardware, she noted. "This is hopefully a new era" during which operators will begin using lower cost, off-the-shelf hardware components, she said.

Microsoft currently has ten operator customers around the world with commercial IPTV offerings and an additional 13 that are trying the technology or making limited offerings.

Those experiences show that Microsoft may have to do some more work before convincing operators to deploy more Microsoft products. Earlier this year, AT&T Inc., one of Microsoft's IPTV customers, said that it was having technical problems related to software programming that was causing launch delays. Swisscom AG and Deutsche Telekom AG also delayed commercial services after technical difficulties with Microsoft IPTV products.

Heckart described other challenges Microsoft's TV group faces. Currently, each customer implementation is a "high-touch environment," requiring a Microsoft team to work closely with the operator. "We haven't figured out how to cookie-cutter that and scale down in a way that allows us to use a low-touch model," she said.

In addition, Microsoft is about a year behind its original IPTV targets because it took longer than expected to bring the product to market, she said.

Microsoft is pleased with the customer wins it has so far and with the progress of operators like AT&T, she said. AT&T had 51,000 subscribers as of the end of June and has a target of adding 10,000 new customers every week by the end of the year, she said.

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