MS's IPTV strategy in tatters

Delays leave Redmond standing

Analysis Beneath the covers, Microsoft’s TV strategy appears to be in tatters. Fastweb can manage it in Italy, Homechoice can manage it in the UK, Maligne and Free have managed it in France, Telefonica in Spain and Bell Canada have also launched IPTV services, while Telenor has managed it across the face of Scandinavia and Ella communications and about 10 other smaller operators in Norway and even Telecom Iceland have all managed to launch IPTV services with open standard components.

But Swisscom, the one company that Microsoft managed to convince to go with its proprietary vision, is delayed. The reason, market insiders tell us, is that the software is deliberately proprietary, does not use a standard Java browser, handshakes with billing and admin servers using proprietary .NET extensions and technology wise looks nothing like any other IPTV installation.

Instead it is overly complicated and impenetrable to the competition, an attempt to engineer an interface shut-out in the TV markets. It also costs something like 6 times the price of other services and necessitates the use of Windows 2003 VoD servers, something they are singularly not good at. The whole affair may be a nightmare to manage support for, driving operating costs higher.

This delay message cannot remain unheard in the US, where Verizon and SBC have both publicly committed to using Microsoft IPTV and where Bellsouth has been rumored for the past nine months to be on the verge of choosing Microsoft as well, to create a clean sweep of the major US Telcos.

But while the Swisscom announcement is clearly public, the ominous silence at Bellsouth speaks volumes and rumors have begun to emerge that Bellsouth is almost ready to declare a completely open standard approach to its triple play TV strategy, dumping Microsoft entirely.

These rumors have it that Bellsouth has asked alternative vendors to re-pitch because the Microsoft based equipment trials have been so disappointing.

If it is brave enough to break with the consensus, Bellsouth may cause a stampede out of the delayed and frustrating technology, breaking the Microsoft stranglehold. If Bellsouth dumps it, the chances are that all the US telcos will, and all bets for Microsoft will be off in the Telco TV network arena.

Bellsouth has been testing a new TV service using the Microsoft IPTV set top software through to this Summer, which is a hybrid offering Video on Demand and DirecTV satellite TV, and it is well past the date that we would have expected an endorsement of the Microsoft software.

Going back two years and the software giant had nothing but failures in the TV technology area, until a re-launch in June 2003 of Microsoft’s TV Foundation Edition set top software, that it planned to pitch to the US cable market, much to the chagrin of set top makers like Motorola and Scientific Atlanta.

At the time Microsoft announced partnerships with the two public Video on Demand servers specialists, Seachange and Concurrent, announcing them as partners in Microsoft TV Foundation Edition, but they both must have felt an icy chill at the Microsoft advances. Clearly Microsoft client server and .NET technology contains extremely secret extensions that have already upset the European Commission anti-trust authorities to the point where it has fined Microsoft.

These are likely to also emerge in Microsoft’s TV technology in order to automatically give Microsoft servers a leg up in the Video on Demand market, allowing them to work better with the tightly entwined set top architecture. That’s certainly the case with the IPTV set tops that Microsoft is trying to develop for Swisscom, though we can’t be sure about the Cable TV variant, which seem to actually work.

Insiders tell us that the code base for the IPTV set top and server services is completely different from the cable TV code base, despite the fact that the two systems do much the same thing, albeit over widely varying networks. Microsoft gets a double whammy if all cable VoD servers turn into Windows 2003 boxes, as well as making a software charge for each cable set top.

Shortly after the new Foundation Edition was launched, Cablevision stepped up and deployed this Microsoft system in Mexico City which is now supposed to have rolled out to around half a million homes with the prospect of that rising to 1.8 million over the next few years. Recently Microsoft managed an upgrade to version 1.7, downloading the software overnight to all of the remote set tops, and installing it, supposedly without a hitch.

The new Microsoft software offered support services to existing VoD platforms, such as two-way interactivity for interactive TV, advertising targeting, better awareness of what’s available on a VoD system through the creation of On-Demand Storefronts, improved backoffice integration, and new applications including games and viewer self provisioning. It had a new Interactive Program Guide and allows users to customize their television viewing.

Hard on the back of that deployment, Cablevision and Comcast both committed to the Microsoft set top architecture in the US, sitting on Motorola set tops, placing orders that were likely to make the Microsoft cable architecture dominant in the US. Comcast alone took out a contract that allowed it to deploy five million set tops.

SBC, Verizon and Bellsouth appear to want their new TV services to be as close to US cable TV services as possible. Ideally they would want customers to not notice the switchover, except for the triple play bundle price being lower.

But if the cost to the Telcos is twofold, in that Microsoft charges more for its software AND it leads to a delay in competing with the cable companies, then they are likely to stick to what they have now.

What Verizon has now is little more than a plan to launch TV services this year, while SBC already has a TV platform with its relationship with 2Wire for a set top that mergers Video on Demand with satellite broadcast delivery, which it gets from EchoStar. It has called this an interim solution while it is waiting for the Microsoft system to work and for the build out of its Project Lightspeed fiber network extensions, which should be ready in 2007.

None of this rings true with reality. Cable operators are deploying VoIP to complete their triple play bundle as of January 2005, in Cablevision’s case six month earlier.

Telcos will be losing two million customer a year collectively if they do nothing to halt the triple play bundle sell of the cable operators, by 2007 they will have lost about six per cent of the US telephony market before they even get competitive. Delays are not an option.

And why would the US Telcos stick with a supplier that is renowned for writing software, but which cannot seem to get a simple internet application stack to work?

Swisscom still insists that it will launch its Bluewin TV in 2006 after technical trials are completed at with employees of Swisscom and Microsoft at the tail end of this year.

The commercial launch had been scheduled for the second half of 2005 but the technology was deemed “not yet suitable for serial delivery”, in particular since the set-top box has no internal hard disk and only one television channel is available. The Microsoft deal was cut as early as November 2003 and a 600 household trial ran at the end of 2004.

Swisscom will start upgrading its infrastructure this summer using VDSL and by 2007 it says that half of Swiss households will have VDSL installed.

Strange that Swisscom is going to stick with the Microsoft approach despite the fact that everywhere else in Europe, IPTV has already been delivered. Perhaps it will also quietly change its mind.

Copyright © 2005, Faultline

Faultline is published by Rethink Research, a London-based publishing and consulting firm. This weekly newsletter is an assessment of the impact of the week's events in the world of digital media. Faultline is where media meets technology. Subscription details here.

Related stories

ANT - trying not to be tiny in a big IPTV world
Microsoft punts telco platform
US and Europe embrace the digital home

Other stories you might like

  • Twitter founder Dorsey beats hasty retweet from the board
    As shareholders sue the social network amid Elon Musk's takeover scramble

    Twitter has officially entered the post-Dorsey age: its founder and two-time CEO's board term expired Wednesday, marking the first time the social media company hasn't had him around in some capacity.

    Jack Dorsey announced his resignation as Twitter chief exec in November 2021, and passed the baton to Parag Agrawal while remaining on the board. Now that board term has ended, and Dorsey has stepped down as expected. Agrawal has taken Dorsey's board seat; Salesforce co-CEO Bret Taylor has assumed the role of Twitter's board chair. 

    In his resignation announcement, Dorsey – who co-founded and is CEO of Block (formerly Square) – said having founders leading the companies they created can be severely limiting for an organization and can serve as a single point of failure. "I believe it's critical a company can stand on its own, free of its founder's influence or direction," Dorsey said. He didn't respond to a request for further comment today. 

    Continue reading
  • Snowflake stock drops as some top customers cut usage
    You might say its valuation is melting away

    IPO darling Snowflake's share price took a beating in an already bearish market for tech stocks after filing weaker than expected financial guidance amid a slowdown in orders from some of its largest customers.

    For its first quarter of fiscal 2023, ended April 30, Snowflake's revenue grew 85 percent year-on-year to $422.4 million. The company made an operating loss of $188.8 million, albeit down from $205.6 million a year ago.

    Although surpassing revenue expectations, the cloud-based data warehousing business saw its valuation tumble 16 percent in extended trading on Wednesday. Its stock price dived from $133 apiece to $117 in after-hours trading, and today is cruising back at $127. That stumble arrived amid a general tech stock sell-off some observers said was overdue.

    Continue reading
  • Amazon investors nuke proposed ethics overhaul and say yes to $212m CEO pay
    Workplace safety, labor organizing, sustainability and, um, wage 'fairness' all struck down in vote

    Amazon CEO Andy Jassy's first shareholder meeting was a rousing success for Amazon leadership and Jassy's bank account. But for activist investors intent on making Amazon more open and transparent, it was nothing short of a disaster.

    While actual voting results haven't been released yet, Amazon general counsel David Zapolsky told Reuters that stock owners voted down fifteen shareholder resolutions addressing topics including workplace safety, labor organizing, sustainability, and pay fairness. Amazon's board recommended voting no on all of the proposals.

    Jassy and the board scored additional victories in the form of shareholder approval for board appointments, executive compensation and a 20-for-1 stock split. Jassy's executive compensation package, which is tied to Amazon stock price and mostly delivered as stock awards over a multi-year period, was $212 million in 2021. 

    Continue reading
  • Confirmed: Broadcom, VMware agree to $61b merger
    Unless anyone out there can make a better offer. Oh, Elon?

    Broadcom has confirmed it intends to acquire VMware in a deal that looks set to be worth $61 billion, if it goes ahead: the agreement provides for a “go-shop” provision under which the virtualization giant may solicit alternative offers.

    Rumors of the proposed merger emerged earlier this week, amid much speculation, but neither of the companies was prepared to comment on the deal before today, when it was disclosed that the boards of directors of both organizations have unanimously approved the agreement.

    Michael Dell and Silver Lake investors, which own just over half of the outstanding shares in VMware between both, have apparently signed support agreements to vote in favor of the transaction, so long as the VMware board continues to recommend the proposed transaction with chip designer Broadcom.

    Continue reading
  • Perl Steering Council lays out a backwards compatible future for Perl 7
    Sensibly written code only, please. Plus: what all those 'heated discussions' were about

    The much-anticipated Perl 7 continues to twinkle in the distance although the final release of 5.36.0 is "just around the corner", according to the Perl Steering Council.

    Well into its fourth decade, the fortunes of Perl have ebbed and flowed over the years. Things came to a head last year, with the departure of former "pumpking" Sawyer X, following what he described as community "hostility."

    Part of the issue stemmed from the planned version 7 release, a key element of which, according to a post by the steering council "was to significantly reduce the boilerplate needed at the top of your code, by enabling a lot of widely used modules / pragmas."

    Continue reading

Biting the hand that feeds IT © 1998–2022