The computer industry, led by Bill Gates, is hoping to sell intelligent television to couch potatoes. Mark Tran reports from New York
`WHAT’S the biggest innovation of the last 20 years in the TV industry? The remote control,” says Steve Goldberg, who manages the digital television marketing programme at Compaq Computer.
The comment sums up the low opinion computer makers have of television manufacturers as the two industries gird themselves for battle in the era of digital television, the biggest revolution since colour TV.
This month, the United States Federal Communications Commission (FCC) formally gave the green light for digital, high- definition television. Ultimately, the introduction of digital television will make obsolete all 240-million television sets in the US, and the consignment of these analogue TVs to the dustbin of history could cost as much as $250-billion in the next decade.
It was no coincidence that days after the FCC sounded the death knell for analogue TV, Bill Gates’ Microsoft announced the $425-million purchase of WebTV Networks, whose black boxes allow viewers to retrieve electronic mail and surf the World Wide Web on their current television sets.
WebTV, formed in 1995, has seen less than stellar sales, but Microsoft considers the company worth its biggest investment yet in an Internet company. Some analysts saw the deal as a pre-emptive move by Microsoft to prevent another company, such as Rupert Murdoch’s News Corp or Sun Microsystems, from acquiring the start-up.
There has been much hype about the convergence of communications, information and entertainment. So far, only one company has managed to combine all three into a going concern, albeit with a heavy dose of problems – America Online.
Digital TV is the next Holy Grail in the quest for convergence. “TV is the ultimate convergence medium,” says Mercer media analyst Peter Kreisky.
Digital television will offer unnaturally sharp pictures on a new wide, flat screen, as well as six-channel, digital audio systems. The new television sets will take on characteristics of a computer, providing interactivity with broadcasters and cable operators, as well as a range of digital services only now being devised.
Computer manufacturers believe this is their big chance to push acceptance of PCs to another level after reaching a plateau of penetration of US homes, about 40%.
TV manufacturers believe TV’s appeal lies in its idiot-box quality, or easy interface to put it more kindly. The industry contends that people will want to buy digital TVs simply because of the picture quality rather than for the ability to surf on the Net or do home banking.
While TV manufacturers and computer companies prepare for this huge new market, a much more mundane factor in the potential success of digital TV is whether it will offer high-speed access to the Net along fibre-optic lines – by no means universal in the US. Britain is actually better prepared for digital TV as deregulation has led to the creation of an infrastructure with ISDN lines and satellite television.
Microsoft is betting that it can increase its penetration of the US home by piggybacking on WebTV and digital television.
In buying WebTV Networks, Gates is seeking to capture customers who surf the Web either through TV or the PC. The software giant already has a foot in broadcasting through its alliance with NBC in a cable venture.
Microsoft’s purchase of WebTV can also be seen as a tactical strike against Oracle and Sun Microsystems. With WebTV as part of its empire, Microsoft owns an inexpensive device costing $300 that allows access to the Net via the television. As for TV manufacturers, they are banking on couch potatoes remaining content with nothing more complicated than the remote.