TVHarmony Blogs With JupiterResearch and What Microsoft Must do to Win the Living Room

TVHarmony: Jupiter Research and Microsoft MCE: Will Wagner of TVHarmony is out with his post on a recent blogging experiment that Michael Gartenberg of JupiterResearch put together. The deal was that Jupiter would give out research reports (to which an annual subscription is usually $22,000) to bloggers to write about and then JupiterResearch would respond on their site and post a link to the blogger’s article.

I really enjoyed writing my article for Gartenberg and think that it’s great how he and JupiterResearch have embraced the blogosphere. I think Gartenberg’s idea is a win/win for both Jupiter and bloggers and hope that he continues his program.

So Will wrote his article on the same report that I did, “PC and Standalone Digital Video Recorders, Strategies to Cope with an Uncertain Market,?” and Will came up with some great ideas on how Microsoft might want to consider gaining more market share than what is predicted by JupiterResearch in the years ahead.

Specifically Will recommends that Microsoft consider four things. 1. Continue to increase the stability of MCE. 2. Give it Away for Free. 3. Create a sub $100 Media Extender. 4. Expand MCE certified devices.

Well I have to say I could not agree more with Will on point number one. A Media Center PC (and those two little letters P and C might mean this is not possible) must be as rock solid as a TiVo in order to get the average consumer who is quite fearful of technology in their tv to embrace it. Really easy support should also be a part of this equation.

With regards to giving the software away, although this would be quite exciting, I don’t think that Microsoft would go for it. Microsoft LOVES XP and Office. These are cash cows at the company. Despite what they may say, they HATE IE and WMP. IE and WMP were built out of desperation. These were defensive products primarily designed to help lock down the cash cows that are XP and Office. LOVES and HATE are too harsh of words of course but I’m using them here for sensationalistic effect to make a point.

Gates sees the tv thing as really really big. He’s put a lot of his own time and energy into pushing it. If you give it away today you set a precedent where MCE cannot really be a cash cow of the future. If you gave away the application that is MCE people would just load it on to their existing XP operating system PCs. Microsoft doesn’t want that. They want to sell you an entire second operating system and get the dough that comes along with that. And if MCE is as big as it is in Gate’s head (and this is much bigger than the folks at Jupiter would guess) then giving away the software doesn’t make sense to him.

Gates reported at CES that Windows Media Player has now been downloaded 90 million times. 90 million times! That number is astonishing. Heck, the entire US population (yes I know people outside of the US download WMP) is only about 293 million. But does the WMP product get anywhere near the attention at Microsoft as Office, or XP or even MCE? No. Because they don’t make any money on it in comparison.

Now Gartenberg puts the current number of DVRs out there for 2005 at 15 million. The entire market is less than 20% of the number of times WMP has been downloaded and yet MCE gets far more attention than WMP. Charging for this operating system is a sacred cow for Microsoft and I really doubt you’d see this changed.

By the way, JupiterResearch expects to see PCs represent about 7.15 million DVR units in 2009. While obviously Microsoft would be the bulk of those I’d assume, also included in that number would be the open source stuff, Myth, etc. Gates recently said in a BBC interview, “as these devices come out, we will be able to double the sales every year for a number of years.” So if we have 1.4 million MCE units in January 2004 (what Gate’s said at CES) then if you do the exponential type of numbers in your head you come up with a much larger number than JupiterMedia’s 7 million by 2009. In fact, more directly, last August, William Poole a Senior Vice President with Microsoft who leads the Client business, suggested that ” Microsoft expects the Media Center installed base to grow from about 1.5 million at the end of 2004 to more than 20 million by 2008.”

Microsoft sees the market for MCE as huge and they ain’t gonna turn it into a WMP or IE.

Ok, on to Will’s point number three, sub $100 extenders. A very real possibility and an excellent point. For every extender there has to be at least on copy of MCE. The value proposition here is that Microsoft charges nothing on a monthly basis for their guide or service with MCE. A satellite or cable company will charge you extra every month for each box. A sub $100 extender would be very appealing to the individual who today is paying for a bunch of extra satellite boxes every month. I actually think we may see this. Great point.

And finally Will suggests that Microsoft should expand MCE certified devices. Absolutely. Could not agree more. Microsoft does also need to use their bully pulpit from time to time to force these companies to update drivers and make products that friggin’ actually work with MCE. It’s appalling to me to see that Microsoft either has no leverage or refuses to use their leverage to force OEMs to support upgrades of their MCE software for instance.

If an end user has a bad experience due to a piece of third party software or hardware not working then in the end Microsoft gets blamed, not Sonic or NVidia or ATI or whoever else. Microsoft should play hardball and force these partners to get this accreditation seal of approval and require them to maintain it on going for all devices as they continue to offer new versions of MCE.

Will makes an excellent case for a server/thin client home and has a lot more to say as well. I’d encourage all of you to check it out directly at

Will is going to take on what TiVo needs to do next and I can’t wait to see this.