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Computer Hardware & Software
Gates: We Still Aim To Be Everywhere, Dammit!
Victoria Murphy, 01.07.04, 10:00 PM ET
http://www.forbes.com/home_europe/2004/01/07/cz_vm_0107gates.html
SILICON VALLEY - Microsoft wants to dominate your living room. Still. That's the message that Bill Gates is delivering (again) at the Consumer Electronics Show in Las Vegas this year. Never mind that the task has proved harder than expected. Gates takes a long-term view.

At his CES keynote speech a year ago, Gates spoke of "smart living in the Digital Decade." This year's twist: "We're laying out a roadmap for the Digital Decade," says Microsoft (nasdaq: MSFT - news - people ) consumer strategy director John O'Rourke, giving a preview of the agenda. This includes familiar-sounding mantras like seamless computing experiences, connected systems and information-driven software.

Techno-babble aside, Gates will tout a new pocket-size device with a high-resolution color screen that can store full-length movies and photo albums. The so-called Portable Media Center will be manufactured with partners Samsung Electronics, Sanyo, Creative Labs (nasdaq: CREAF - news - people ), and iRiver International.

Microsoft's device won't be the first movies-on-the-go gadget to hit the market. Already a French company, Archos SA, is selling media players that circumvent some copy protection schemes on DVDs--controversial for content providers but popular with consumers. Archos has reportedly sold 100,000 units in the last six months.

Microsoft has not always fared well when it ventures beyond the PC. So far the company's single stand-out success outside of familiar turf has been with xBox, which has an estimated installed base of 8.5 million (still considerably less than Sony Playstation's 24 million). Microsoft's smartphone software last year sold on an estimated 230,000 mobile phones, compared to 8 million running rival Symbian's technology.

Gates' plug last year for more intelligent everyday devices, like alarm clocks that know personal schedules and magnets showing traffic jams, has yet to bear fruit. The company's SPOT-enabled Fossil (nasdaq: FOSL - news - people ) and Suunto label watches were promised to hit stores just in time for the past holiday season, but now are slotted for delivery at Macy's and Amazon.com's shopping website (nasdaq: AMZN - news - people ) later this year. (SPOT stands for Smart Personal Objects Technology.) The Internet-connected watches, ranging in price from $129 to $299, should detail weather and sports scores for an annual subscription fee of $59.

Undaunted, Gates at CES is promising technologies for the 2004 holiday shopping season that will connect a Windows Media Center PC with other devices such as a standard television or xBox so that music and photos can be shared. Hardware partners include Dell (Nasdaq: DELL - news - people ), Gateway (nyse: GTW - news - people ), and Hewlett-Packard (nyse: HPQ - news - people ).

A new and improved version of Microsoft's $9.95 a month online service, MSN Premium, also debuts at CES. On stage Gates will get a little help from NBC talk show host Jay Leno whose Tonight Show will be archived on the MSN site and searchable using text-based queries. Other video content will come from the Discovery Channel, Showtime, and the National Hockey League. New anti-virus and firewall protection will come from security vendor Symantec (Nasdaq: SYMC - news - people ). So far, out of MSN's 8 million subscribers, 25,000 are paying up for the premium offering.

Consumers seem more eager than ever to digitalize homelife. In November NPD Group reported a 124% year-over-year rise in sales of wireless networking gear to consumers; storage media was up 90%. "What's changing isn't Microsoft's message, but the willingness among consumers to bring computer-based electronics into their living rooms," says Bob Austrian, former software analyst for Banc of America, who is currently on sabbatical.