A Microsoft TV Box To Compete With Google And Apple

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Microsoft (NASDAQ: MSFT) will launch a TV set-top box at the International Consumer Electronics Show, according to a number of media reports. It will compete with Apple (NASDAQ: AAPL), Google (NASDAQ: GOOG), and  the cable set-tops and DVRs already in most American homes. It will also have to take market share from video streaming systems such as Netflix (NASDAQ: NFLX), unless it can enlist them as partners.

It would be easy to say that Microsoft is too late to the smart-TV market as it was too late to the multimedia player business with its Zune or to the smartphone market with Windows 7’s mobile OS.

Microsoft has many advantages that make it probable it will be a formidable opponent in an American family room that cannot physically accommodate all the consumer electronics devices that wired households can buy and use.

Microsoft’s success with the Xbox line of video game consoles shows what expensive R&D, a nearly unlimited marketing budget, and the tenacity of Microsoft management, which has often been wasted on failed efforts, can do in the electronics industry. It had no business competing with market leader Sony (NASDAQ: SNE) or the devices sold by Nintendo. Microsoft came into an industry with established leaders and engineered and advertised its way to the top.

Microsoft has shown equal tenacity in the search engine business, another example of its resolve to enter and attack markets against high odds.

Microsoft’s other advantage in the family room is that it is already there in many cases. The PC  is still the most widely used electronics utility in the home along with the TV. Americans have already begun to tether the two together. Microsoft may be the company that finally helps strengthen the link between the two machines. That has been the Holy Grail of the consumer electronics field for more than a decade. Tens of billions of dollars have been spent by companies that want to own the PC/TV nexus. There are many more losers than winners by far in that race.

Microsoft’s size and brand often work to its disadvantage. Those things and its ubiquity in the home may be what allows Redmond to win a war is has tried to win for years.

Douglas A. McIntyre