Microsoft Xbox Strategy: Everything Old Is New Again

Microsoft is making a big play at E3, the gaming trade show, about its strategy for the Xbox. I’m sure it was a polished explanation. Why not? It’s a strategy the company has been discussing for at least six years. The question is if the “new” push — whether on the part of Microsoft, Sony, Cisco, or anyone else – to dominate the living room is actually going to work.

It’s not that there is nothing new under the Xbox sun. There is supposed to be integration with Twitter, Facebook, and even some video channels from News Corp’s UK-based Sky satellite service:

Microsoft has long sought a bigger role in home television, going so far in years past as to try to build its own set-top box business. Partnering with Sky represents a back door into the television market.

Users will even be able to update their Netflix queues from an Xbox and not just from a PC.

However, the drive for dominance in the living room is hardly a new theme for Microsoft:

• In 1993, cable television, telephone service, and computers were supposed to converge, and Microsoft was in a partnership with Intel and General Instruments to develop an appropriate device.
• The year 1994 brought the news that Microsoft wants to move into your family room.
• NBC announced that it was selling a stake in its cable channel to Microsoft in 1995. This was supposed to help Microsoft get into the living room.
• In 1996, We were going to see “the end of TV as we know it”, largely thanks to Bill Gates.
• Back in 1997, everyone seemed to be wondering whether Microsoft’s investment in Comcast would mean the beginning of real digital convergence.
• Sony and Microsoft would make an interactive TV box, as we heard in 1998.
• In 1999, Microsoft was one of the players in satellite TV.

May I stop now?

Although I picked Microsoft as the example, I could have chosen any of a number of other companies. These days, Cisco wants to rule the home. Sony wants to rule the home. I’ve even seen a cogent argument that Apple might want to turn Apple TV into a home entertainment center. The concept is anything but new because computer companies lust after the whole world of money that the television industry represents to them. They see technology as driving the meshing, but forget that all the technology in the world is worthless if it doesn’t do what people want.

Last fall I had the occasion to speak with a number of executives and analysts in the worlds of television and network infrastructure. Here are the reasons that convergence still isn’t happening:

1. People like the way that televisions and set-top boxes work when you turn them on.
2. The Internet is not yet well enough set to satisfy the average television user, who has no interest in noise in signals or in dropped video frames.
3. Although downloading video is fine, most people aren’t going to trust computer and network vendors to deliver the previous two requirements.

It’s going to take a lot of work to create reliable services so that most consumers will even give computer-related companies a chance to see if they can pull off what they promise. It’s a case where grand visions are fine, but it will be the little steps that get vendors where they want to go — many years from now.

Shot of Microsoft E3 Xbox briefing by Flickr user Major Nelson, CC 2.0.