Microsoft stretches truth over TV "partners"

Companies recently claimed by Microsoft as customers for its Microsoft TV client-server software platform - including the parent company of Chello - say they are nothing of the sort.

          Microsoft earlier this month used the International Broadcasting Convention in Amsterdam to push its Microsoft TV client-server software platform as a way to revolutionise interactive TV. However, though Microsoft claimed to have firm international commitments for the software, companies that are supposed customers of the product disagree with this claim.

          Further examination of Microsoft's claims reveals that, in fact, none of the major operators in Europe are, as of yet, committed to employ Microsoft's software for their digital subscription services.

          IBC was the first time in Europe that Microsoft demonstrated its combined software and operating system for TV and revealed its plans for global expansion. The TV client software is to be made available in two versions: Basic Digital and Advanced.

          In a bulging press folder, Microsoft claimed that it has already concluded extensive agreements for its TV platform with cable operators and manufacturers of set-top boxes. In a press release, the company wrote that Microsoft "already has commitments for 15 million set-top boxes running the software worldwide, including TV Cabo in Portugal, NTL Group Ltd. in the United Kingdom, United Pan-Europe Communications (UPC) in the Netherlands ( which is the parent company of Chello and is linked to Saturn Communications' US parent company) and AT&T Broadband in the United States."

          The director of the Microsoft TV Platform Group, Ed Graczyk, gave the impression that all the formalities are in order for the rollout.

          "UPC will begin to implement this before the end of the year, and the hardware will be made ready for Microsoft TV in the first quarter of 2001," Ed Graczyk told Computerworld in Amsterdam.

          But Microsoft's supposed customers give a different impression.

          "This is not our version of the story," said UPC’s spokesman Bert Holtkamp, who was surprised at the way Microsoft presented its rollout plans.

          Microsoft's press release folder has painted the map of Europe MS blue. All the 16 European countries in which UPC operates will be offered the software, it says, and UPC is described as a "dedicated partner."

          But UPC's dedication is limited. According to Holtkamp, Microsoft's TV unit has yet to sign an agreement with UPC for the delivery of software for interactive TV. Moreover, it is UPC that has given Microsoft a date for delivery, and Holtkamp doubts that Microsoft will have everything ready for UPC's final deadline.

          "We have a pain threshold in relation to our timetable for implementation of interactive TV. We have given Microsoft a final deadline to the end of the year to get the product ready and adapt it to UPC's requirements, and they must move quickly if they are to have any chance at all," Holtkamp said.

          In the battle for the favor of the cable operators, Microsoft is lagging several months behind its main competitor, Liberate Technologies, which is 41% owned by Microsoft's archenemy, Oracle. Liberate's software for cable subscribers of interactive TV is market-ready, and the company has already secured a contract with UPC to supply the service.

          A couple of weeks ago, the two companies publicised a provisional joint venture in Austria, and UPC's Chief Executive Officer, Gene Musselmann, talked very positively about his partner.

          "Liberate's middleware meets all our requirements, including the need for an open architecture," he said.

          If everything goes according to plan in Austria, it's very likely that UPC will continue to use Liberate's software.

          "It is clear that Liberate is a natural choice for the implementation throughout Europe, if everything goes well in Vienna," said UPC's Holtkamp.

          The UK company NTL also denies that its own agreement with Microsoft is exclusive.

          "We are using software from both Microsoft and Liberate in our set-top boxes," said NTL official Will Robson.

          This means that Microsoft may lose the first round of the battle for European interactive TV contracts. And their presentation of their European expansion to press and public is, at best, defective. Although their rollout is hardly going according to plan, Microsoft's marketing leaves the impression that agreements for some 20 million European customers -- including UPC's subscribers -- are already secured.

          Liberate Technologies is upset over Microsoft's tactics. Stuart Collingwood, Liberate's European director, claims Microsoft is referring to a product that does not exist yet and for which the launch date is highly uncertain.

          "Microsoft's story is not true. I saw their presentation at IBC, where they talked about access to six million UPC customers and several million more with NTL, but they have not offered a single digital TV product in a single home," said Collingwood.

          He is frustrated with Microsoft issuing press release after press release about joint ventures just after Liberate has made similar announcements. Collingwood refers to the announcement of a joint venture with Philips, the producer of set-top box hardware, and similar announcements relating to the U.K. operator NTL, the Canadian operator Rogers, and now, UPC.

          "We think Microsoft is using this tactic to strengthen their position in the market at our expense, but anyone who knows anything about the industry knows that the tactic is based on a giant lie. I think it's filthy," said Collingwood, who calls it the same old Microsoft marketing story.

          "They don't have the product, but they say it's already sold. I’m not surprised," said Collingwood.

          Microsoft has invested billions of dollars in cable operators over the last year. It owns 8 percent of UPC and has bought into AT&T for $US5 billion. Last week, it became clear that even AT&T appears to prefer the software from Liberate Technologies.

          "Microsoft has put the management of the cable companies in a dilemma by owning large interests without having a finished product," claimed Collingwood, who is talking to several European operators, including UPC, about an extended collaboration due to Microsoft's delay. He declines to specify the cooperation talks any further.

          Microsoft's Graczyk rejects Collingwood’s allegations, but claims that many cable operators are talking to several suppliers at the same time.

          "It is more important for us to deliver a solid platform than to be the first to launch," Graczyk told Computerworld.

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