Microsoft looks to be a digital landlord

The digital home is on the horizon, and Microsoft Corp. is on the hunt for some new real estate.

Speaking from the software maker's Mountain View, California campus Monday, Microsoft Vice President Mike Toutonghi laid out the company's latest efforts to develop software and services for home users, now part of a new business unit at Microsoft called the eHome division. Officially formed in February this year, Microsoft's eHome division is at the fore of the company's efforts to build a Windows-centric home network that enables average consumers to use a PC for consuming entertainment and communicating with voice, video and text over the Internet -- what Toutonghi referred to as "applying the PC's power to the home."

About nine years after it first started researching new computing technologies aimed at home users, Microsoft now says the statistics are finally beginning to reveal a consumer market that is capable of adopting new technologies in the home. About 7 percent of U.S. homes have broadband Internet connections, and another 6 percent have home networks installed in some capacity to link multiple computers and other Internet-connected devices, Microsoft said, citing market research.

The combination of high-speed Internet and home networks lay the foundation for Microsoft's vision for the future of consumer computing. And with the launch of its Windows XP operating system, Toutonghi said the company is already offering the basic tools that will allow users to adopt early versions of the eHome. For instance, Windows XP includes a video instant messaging service and digital music management software.

A number of competing hardware and software makers already offer the kinds of products and services that Microsoft outlined in its eHome. Yahoo Inc. unveiled Monday a new service for its free e-mail that allows subscribers to send video messages as well as text. Consumers can also use digital audio software from companies such as Real Networks Inc. to play, record and manage music across multiple devices. And several hardware makers have turned the television into an outlet for home computing through video game consoles and set-top boxes.

However, Toutonghi says there is still no simple way to make all these devices and services work with each other. "The very early adopters can take a lot of products that are out there and make an environment like this," he said. "But for the broader market ... the kinds of experiences people want are still somewhat out of reach."

Some attendees here argue that Microsoft's vision is also out of reach because many hardware and software makers have yet to agree on technology standards that will create an open environment. Everything from wireless protocols to content delivery techniques are still broken into a hodgepodge of products used by competing vendors.

"I think it's going to take a very long time for any of this to happen," said Aaron McNally, a MBA candidate at the University of California's Haas School of Business, who attended the event.

"No one is going to allow one company to own all of this," he said. "There are so many big companies working on the same thing."

A representative from Motorola Inc., which makes everything from television set-top boxes to cell phones, offered a similar response to Microsoft's latest pitch to home users.

"I think many companies are working toward the same goal," said Lu Chang, a managing researcher with the home computing division at Motorola's research lab. To that end, he said it is not very realistic for Microsoft to put its software and technology at the center of the home network. "This is another example of Microsoft's mentality of PC-centric, Windows-centric computing."

While Microsoft has traditionally remained its own island in the technology community, making it difficult for competitors to build compatible software, Toutonghi said that the company is extending its industry relationships going forward. One driving factor in this is its settlement with the U.S. government, which orders the company to license parts of the Windows source code and other technical hooks in its operating system to competitors.

"We are devoted to working with the industry to make a rich ecosystem of devices," Toutonghi said. "It's important for us to look at ways we can integrate offerings from all sorts of companies."

Despite these claims, Microsoft has its own standards and industry partnerships that are dominating its efforts in the areas of entertainment and communications. For instance, Toutonghi noted that more than 80 different kinds of consumer devices support the Windows Media Format for audio and video content, a technology that competes with a similar format from Real Networks as well as the MP3 file format. The software maker also has its own proprietary digital rights management technology that it licenses to companies for protecting different types of content.

Missing from Microsoft's presentation was any mention of using the home network to manage other basic functions in the home, such as heating systems, kitchen appliances or power consumption -- an area that many companies have tried to explore. The only concept Microsoft presented Monday related to home management was a service that would allow a user to monitor family members inside a home and display a map showing where every family member is at any given time.

However, Microsoft said that service and other home management services won't be available for another few years. "Yes we've talked about it; everyone has talked about it," he said. "We haven't really had the resources to do this yet ... In part because the technology wasn't there or it was too expensive."

In fact, the eHome division has yet to make any hard product announcements, and doesn't expect to for at least a year, Toutonghi said.

"We very much consider this a long-term initiative," he said.

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