Can Microsoft Beat The Set-Top Box? - InformationWeek
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Can Microsoft Beat The Set-Top Box?

Microsoft is setting the groundwork to challenge cable companies with Home Server, Vista, and the Xbox video game console, which can play Internet content and high-definition DVDs on a TV.

Microsoft made it clear at this week's Windows Hardware Engineering Conference that it sees the home network as key to making the Windows PC the family entertainment hub. But the device most likely to pose the biggest challenge is already sitting in many living rooms: the cable TV set-top box.

The star of Microsoft's strategy is Windows Vista, which includes software that simplifies the task of setting up a wireless network and adding devices to it. A demo during Microsoft chairman Bill Gates' opening keynote on Tuesday showed how the technology, called Windows Rally, makes it easy to install a wireless router, a network-attached storage device, and hardware to stream media to a TV or sound system.

Gates also highlighted Microsoft's upcoming Windows Home Server, which is expected to ship in the second half of this year. Based on Windows Server 2003, the new product would provide a simple process for sharing digital content among networked computers, performing automatic daily backups, and monitoring security on each PC to ensure that firewalls and antivirus software are turned on.

Microsoft's focus on simplicity, something that has eluded the PC since its introduction more than 25 years ago, is key if the company eventually wants to distribute TV programming over the home network. For most people, TV watching should only involve a remote control.

On that level, set-top boxes deliver, and are evolving into platforms to do much more. Besides being able to record programming or download movies from service providers, manufacturers such as TiVo and Cisco Systems, which owns set-top box maker Scientific Atlanta, have also added the ability to access the Internet.

Cisco, which also owns home-networking equipment maker Linksys, could become an even bigger challenger to Microsoft if it added the ability to distribute Internet content and TV programming wirelessly to other devices in the home. Cisco could also provide a wireless connection to the Internet for the PC, making it a peripheral to the set-top box.

While Cisco hasn't announced such plans, the company has the pieces it needs to make the set-top box the hub of the digital home. "Cisco has the edge because they have the connection into the TV that Microsoft doesn't have," Ian Lao, analyst for In-Stat, said in an interview.

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