Microsoft Gets Into the Guide Game

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For the opening act of its reconstituted interactive-TV unit, Microsoft Corp. will trot out a a new cable-centric interactive program guide at this week's National Show.

In April — when Microsoft reorganized its ITV force, with plans to lay off 200 staffers — officials mused about developing an IPG for first-generation digital-cable converters with souped-up features considered more appropriate for advanced set-top models.

Today (May 6), Microsoft is expected to turn the musing into an application demonstrated on the National Cable & Telecommunications Association's convention floor, and one ready for release to operators and set-top vendors by the end of the month.

The IPG service is compatible with Motorola's DCT-1000 and 2000 set-top models and can be ported to first-generation boxes from Scientific-Atlanta Inc., Pioneer Electronics Corp. and other box vendors, said Microsoft TV marketing director Ed Graczyk.

"We'll do the porting based on demand," he said. "If there's a need to tailor this for a particular box other than Motorola, we'll do it."

Why dive into this application first, joining a marketplace where Gemstar/TV Guide dominates and other contenders are fighting for whatever market share they can get — especially since Microsoft is a Gemstar intellectual property licensee? (Microsoft already licenses Gemstar's IP for its MSN TV, formerly WebTV, and Ultimate TV services.)

A full-blown ITV package, or digital-service package, has an IPG at the core. So if the company can make headway here, chances are the impression left on cable operators will generate additional business, Graczyk said.

"It's the one application every operator starts with, and it's a source of some frustration with many operators and consumers," he said. "So here's where we can provide some value off the bat."

With all the features crafted in-house, Microsoft is confident the effort won't be short-circuited by a legal challenge from Gemstar.

"We're a proponent of intellectual property rights, but we've developed this all ourselves," Graczyk said.

While Gemstar controls the most patent-related intellectual property, some companies have deployed competing IPGs. TVGateway — a consortium formed by WorldGate Communications Corp., Comcast Corp., Cox Communications Inc., Adelphia Communications Corp. and Charter Communications Inc. — has been deployed on some Charter and Comcast systems.

S-A and Pioneer also distribute their own IPGs, mostly on Time Warner Cable systems. But Gemstar is suing both of those vendors for patent infringement.

"They [Microsoft] are licensees of our technology, and they have the freedom to use our technology or develop their own," Gemstar-TV Guide spokeswoman Lauren Snyder said last Friday.

"We believe we have the best product, and that's why we've signed so many license agreements with MSOs, and we'll continue to develop that product to make it better and better."

Forrester Research principal analyst Josh Bernoff, who witnessed a demonstration of Microsoft's IPG late last month, called the guide "as good or better than Gemstar." As a Gemstar licensee, Microsoft may have to turn over some guide revenue to them, despite the in-house development, Bernoff said.

But that's a small price to pay, in his view, for an avenue that could eventually result in operating-system contracts with operators.

"They are desperate to make agreements, and a second-source guide is a pretty good way to start," he said.

SEARCH OPTIONS

Operators can stamp their own brand on Microsoft's IPG, and run it full-screen or half-screen. A number of search options, along with a "progressive update" technique, permit users to search for program information by day, title, description or genre.

Operators also can display customer messages and interactive ads on the guide.

Steve Donohue contributed to this report.

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