CES Day Two, Lunch with Ian Dixon and Sean Alexander

Had a good day at CES Day Two. Started out with lunch with Ian Dixon from the Media Center Show and his wife Kim along with Microsoft’s Sean Alexander. It was interesting hearing from Sean about what he’s been up to. Sean recently changed jobs at Microsoft and is now working with the Windows Digital Media Division. This is the group at Microsoft responsible for Windows Media Player among other things. Windows Media Player is one of my favorite applications that Microsoft makes and it’s great to see Sean back on that team. Sean reiterated to me that the performance with Windows Media Player has improved dramatically in Vista and corrected my previous statement that Microsoft had tested Windows Media Player with one million songs, but told me that they’ve actually tested it with two million.

Windows Media Player according to Sean has had a pretty serious overhaul in the performance area and this is something that I’m really looking forward to seeing. Apparently the only way to get Windows Media Player 11, at least at present in beta form, is with Vista. I’m not sure whether you will be required to upgrade to Vista to get it when the product is complete.

Ian is hitting the convention hard and has already met with and interviewed a number of different people for the Windows Media Center show. Most interesting is probably that he scored an interview with Joe Belfiore head of the eHome Group for Windows. Joe was able to give Ian a lot of time and the interview sounds like it will be pretty good. Look to Ian’s show for this interview in the next few weeks.

I talked alot at lunch with Sean about the problem of getting more HDTV content on a video on demand basis. According to Sean one of the problems with getting us more high def content on a downloadable basis is the cost of the bandwidth. Although less of a cost for a major bandwidth buyer like Microsoft, for many smaller companies the bandwidth cost of downloading high def content is still an issue. Sean thought though that we would begin to see more high def downloadable content in the future in places where it had an economic or marketing value. Sean mentioned movie trailers as being prime candidates for these kinds of downloads where their would be a marketing value to the content.

We talked about Viiv a little bit and the improvements that this might bring for Media Center functionality. We talked about some of the things that MTV is doing and Urge and the good news from DirecTV and Microsoft about their collaboration to offer you HDTV on Media Center. At first I was super surprised about hearing about Murdoch agreeing to offer up his content through Media Center but the more I think about it the less surprised I am. Certainly with the CableCARD announcement by Microsoft DirecTV’s hand was most likely forced. At present I subscribe to DirecTV. If though Media Center had CableCARD and I could get HDTV through it I would cancel my DirecTV subscription and instead get cable so that I could get my HDTV content through Media Center. The more I think about this the more I think that this is just pure solid defense on DirecTV’s part. This way they get to keep me as a customer and all the others who are aching for HDTV on Media Center.

HDTV through Vista either with CableCARD or DirecTV is super exciting. I know that I am looking foward to *finally* upgrading my orignal HP 873N (the very first and original MCE machine) once I find a good Vista machine as they begin to come out late next year. I think a lot of people like me are probably waiting and holding out for a Vista machine which I’m sure makes things tough for some of the OEMs in trying to build volume and will only get worse as we get closer to Vista launch.

Another thing that I’d been wondering about was with Microsoft’s strategy with the XBox 360 as an extender unit. In the past I’ve wondered about people who are big Media Center fanatics but non gamers. Particularly as Media Center takes off in the next two years and people begin buying multiple XBox 360s as extender units for their homes my thinking was that Microsoft very well could take a loss on sales to people who buy XBox 360s as extender units. Microsoft basically loses money on the hardware for every XBox 360 they sell. Estimates are that each XBox costs Microsoft as much as $715 per box to make. If, as a non gamer, I were to buy three or four for my home as extender units and never buy any games or online services it would seem to be a bad deal for Microsoft who makes up the hardware loss by selling you games and services with your XBox.

Sean said that this was not as bad as I might suspect though as there are many casual gamers out there. Sean also talked about ways that Microsoft could appeal to these casual gamers by offering things like legacy games that would strike a chord with games they played in their youth as well as the idea of introducing more non gamer type games like board games online. At Christmas my family and I played Trivial Pursuit as we do just about every Christmas. One problem we had was that we were using an edition from about 15 years ago. The questions are hopelessly outdated. I think it would be very cool for us to be able to either buy, or even on a one time pay per view basis, play Trivial Pursuit in our living room through our XBox extender. I think Sean is right and that as people begin to buy XBox 360s as extender units that Microsoft does find ways to market to the casual gamer. There certainly will be a select few that never do anything with their XBox 360s except use it as an extender box but these folks are just part of the cost of doing business.

I haven’t played games in many years but I imagine when I finally do get an XBox that I also may become a bit more of a gamer as certainly the graphics and play seems exciting. There are lines every day at the Microsoft booth with people waiting to play their XBoxes.

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6 Comments

  1. Anonymous says:

    At least one other flavor of extender already exists: the $600 LG DVR running MS (which requires a subscription). But what’s to stop Microsoft from releasing a stand-alone MCE externder that isn’t an Xbox 360? If they release something around $150 (similar to other generic extenders, like Dlink’s) they’d likely sell a ton of units.

    -Dave Zatz

  2. Thomas Hawk says:

    I guess though Dave, why would anyone buy a $600 LG extender when you can get an XBox 360 for less money and it will stream HDTV, something that I don’t think the LG DVR does (I may be wrong on this). While certainly Microsoft could try and offer a cheaper standalone extender I think that it would be tough for them to save any more money on the unit. I’m not sure that there is much that you could strip out of the XBox 360 to make it cheaper to manufacture. You are going to need a high power processer one way or the other to sream high def. The older generation extender boxes are much less powerful and thus I think less expensive to manufacture. To stream HDTV takes more power I suspect and thus cost.

    Microsoft is smart though too and they probably have done market research and have had analysts crunch the numbers and while not making as much by selling services and games to non gamers I do suspect that in aggregate they will still come out ahead on converting some previous non gamers to future gamers.

  3. Bryn says:

    Thomas, love your writing, always interesting. I’m the same 2-million song anonymous poster from the Gates key note speech post.

    IMHO, for the non-gamer crowd, MS should release an equally featured extender, with a twist, the ATI OCUR tuner built in. They could also, obviuosly, release a similar unit for the DirectTV integrated experience. I’m not sure they have the technology there yet, but my expectation is that devices like the recently announced Belkin UWB Usb 2.0 device would be a catalyst to make this type of hardware combination possible. A device like this would immediately make all of those tunerless MCE machines sitting in home offices worth their weight in gold. Not to mention that it might spur Vista upgrades on machines that otherwise may have remained on XP MCE.

    Unfortunately, i think it might be difficult to justify building such a capable device with tuner built in, without built in guide functionality. In which case, you’ll see sub par comcast guide/integration or similarly pathetic directv software.

  4. Mike says:

    I keep hearing from Windowsmedia guys that fixes for WMP10 are going into WMP11 but if that is only available on Vista then the fixes are barely credible. A huge number of naive users are going to suffer from WMP10 bugs for a long time until they can get Vista.

    I’m also waiting to see if any library bugs in particular are actually addressed in v11 as they got precious little attention going from v9 to v10.

  5. Thomas Hawk says:

    Perhaps that might give you a little incentive to upgrade to Vista. Can’t imagine Microsoft wouldn’t want that or anything now.

  6. Mike says:

    If this simply continues the policy of bug fixes require a new platform, then I guess any bugs in WMP-Vista will have to wait another 5 years to be addressed. And didn’t Jim Alchin indicate through this blog that an update would come to WMP 10 in 2005?