Cable giant goes with Microsoft - and Sun too

Microsoft CEO Bill Gates, in a keynote speech at the Consumer Electronics Show, has painted a future world of consumer electronics devices running Windows CE and announced two partnerships to advance the small-footprint operating system. Cable giant Tele-Communications Inc. (TCI) has agreed to use Windows CE in some of its future digital set-top boxes. Some in the industry had expected that Gates would disclose an investment of as much as US$1 billion in TCI. But much of his thunder and perhaps some of his business with TCI was lost when the cable company announced it will license Sun Microsystems' PersonalJava technology for use with the boxes.

Microsoft CEO Bill Gates, in a keynote speech at the Consumer Electronics Show, has painted a future world of consumer electronics devices running Windows CE and announced two partnerships to advance the small footprint operating system.

Cable giant Tele-Communications Inc. (TCI) has agreed to use Windows CE in some of its future digital set-top boxes, Gates announced. Some in the industry had expected more significant news at CES when rumors swirled last week that Gates would disclose an investment of as much as US$1 billion in TCI.

But much of Gate's thunder and perhaps some of his business with TCI was lost yesterday when the cable company announced it will license Sun Microsystems' PersonalJava technology for use with the boxes. Set-top boxes sit between a television set and a cable network, enabling TV reception and advanced services such as Internet access.

Under the deal disclosed by Gates, his company will supply Windows CE to five million of the potentially 12 million digital set-top boxes TCI expects to roll out in early 1999. Gates said the boxes will also use some functionality from Microsoft subsidiary WebTV Networks but did not disclose details.

"This is a major milestone," Gates said of the deal. "The consumer electronics industry is going to enter a phase of excellent growth."

Saving the announcement for late in the keynote, Gates focused most of his presentation on the role that software will play in bringing increased functionality to future digital devices, such as set-top boxes and information appliances.

As software makes its way into everyday appliances and devices, innovation results which in turn drives volume shipments and finally lower prices, he said. Software is a catalyst but, he warned, "when we build these products we've got to make sure they all work together," he said.

Gates' answer to the problem of making it all work together is Windows CE, which he said leverages the universe of Windows application developers and familiarity of the Windows operating system.

In addition to the TCI announcement Gates disclosed that Microsoft will work with chip maker Motorola on developing wireless connectivity services for Windows CE-based devices. The agreement calls for the two partners to initially build one-way paging services over Motorola's Flex paging protocol.

Motorola will design, manufacture and sell a set of wireless modules for Flex-based paging for Windows CE this year, the companies said. In future the companies will expand the services to include two-way paging, they said.

Gates tried to show the flexibility that Windows CE offers to consumer electronics vendors with examples of the OS in action.

The Microsoft head showed a video of the police department in Pittsburgh, Pennsylvania using Windows CE handheld PCs to check vehicle registrations. The clip also showed how the Vail, Colorado ski area uses the handheld PCs to coordinate ski lessons among its staff of 1,300 instructors.

Pointing to a table of devices running Windows CE, Gates tried to show the expanding range of the OS and stressed that all of the devices -- which included HPCs, dedicated terminals and the Palm PC announced this week -- are either shipping or will ship within in six months.

"We're not talking about a vision here, we're talking about something that is very, very concrete," he said.

That may not be true for the Auto PC specification Microsoft announced this week. When demonstrating that technology -- which brings basic computing functionality to a car dashboard -- the unit's voice recognition system failed several times. Gates promised the wrinkles will be ironed out later this year.

In an audience question and answer session after the keynote, Gates addressed some of the current issues surrounding Microsoft and admitted that "It's not fun being sued by the government."

Of Microsoft's ongoing antitrust wrangle with the US Department of Justice, Gates said his company will try to "soften this up a little bit."

The economic problems in Asia that this week shook US financial markets exceptionally hard have also hit Microsoft but the company "won't change our basic product thrust," he said.

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