Microsoft Clocks in to the Digital Decade

Oct 4, 2004  •  Post A Comment

When the invitation was extended to travel to Redmond, Wash., for a visit to the home of Microsoft Corp. to discuss the future of television, I jumped at the opportunity. Since the late 1970s, no corporation has stood more for innovation and the American spirit, both the values and the excesses, than Microsoft. Under Chairman Bill Gates and his team, it has grown from an upstart into a powerful force in global media and information technology. It has played a role in transforming the way America works, lives, plays and communicates.

For the trip, I packed one of my favorite ties, a silk strand in earth tones, because it reminded me of the coming of autumn. In L.A. the leaves won’t fall for many weeks. But I anticipated that in Washington state, I might find the kind of spectacular fall that filled my childhood in Syracuse, N.Y.

As it turned out, the leaves were only beginning to turn around Seattle, but at Microsoft, there was no shortage of change. It was in the air of the sprawling, wooded campuses with their neatly designed pathways and roads scattered over the Puget Sound area. Behind heavy security, workers filled low-rise buildings surrounded by landscaping.

Throughout the day, my associate John Motavalli (who had flown in from New York) and I met with executives, both male and female, most of whom were uniformly smart, youthful (average age 36), energetic and wired into the future of media. We were not scheduled to meet Bill Gates, but it was clear that his philosophy was alive and well. As Mr. Gates laid it out at a conference earlier this year, Microsoft started as a software company but now sees itself as having a much broader role in the next wave in media-the merging of the computer, telephone, television, cable TV and Internet.

“What we’re trying to do,” explained Erin Cullen, group product manager for the Windows digital media division, “is help all the industries we work with, including media and entertainment, look at new business models. How can they expand what they are already doing? How can they reach their audience in new ways and provide new ways for the audience to experience content?”

Or as Mr. Gates said earlier this year: “We are branching out into new areas, driving value into the software. The pace at which we do that, the pace of the innovation, really is a key variable in the financial equation. I’ve been surprised that many software companies don’t broaden out, don’t think of what they’re doing in a comprehensive enough way.”

Just how Microsoft will impact broadcasting and cable is the subject of an article beginning on Page 1 of this issue. This column is meant to share the experience of going to the home of America’s highest-profile technology company. What I found were incredibly dedicated people in very large numbers, about three-quarters of whom were male. The atmosphere was casual, but there was a sense of intense purpose. It began with the company’s official mission: “To enable people and businesses throughout the world to realize their full potential.”

After my second hour on the visit, I quietly took off my tie and put it in my briefcase. As far as I could tell, I was the only male anywhere on the sprawling premises wearing a necktie. At lunch, in the huge subsidized dining area, where an array of excellent hot and cold food was available, there were literally thousands of employees in bunches and groups, all casually attired and completely involved in what was going on.

What was going on? Late in the afternoon, after a visit to a “house of the future” demonstration, we met Frank Barbieri, a former journalist who is group product manager for portable devices. He provided insight into what drives the software giant these days: “If you look at Microsoft overall, we’re responding to what users tell us are a bunch of unmet needs. This is part of successive waves of digitalization. The first big wave of digital media was audio. In response, Microsoft built better tools for managing and playing back audio on your PC. Then photos came up and we built better ways to integrate photos. And we built those experiences into our platform.

“Now we think the next wave is video. There is a lot of data to show users are capturing, downloading, enjoying more and more video on their personal computers. So the next logical step is to take that from the PCs to other places. That includes being able to bring it on a portable device to enjoy when you are away from the home or to share it with others who aren’t in your home.”

Microsoft is an outsider to Hollywood even now. The big studios have feared its ability to copy, move and manipulate media and information as much as they have looked to benefit from it. When Microsoft was trying to be a content creator as well, it was competition. Now that Microsoft has shifted focus, it is more of a customer, using licensed content to drive its devices and services.

For Hollywood, the only remaining question was security. Microsoft responded by taking a leading position in digital media management, to ensure to as high a degree as possible that the data will remain secure-and profitable.

Microsoft has been accused of being a predator, a bully and a monopolist, and some of that may be true. However, what it has also been is an innovator. When it has focused on a market, it has had a transforming impact. Until now that power was mostly played out in the computer world or in video games. Now, however, Microsoft wants to be part of the convergence of old and new media, which will make it an important part of the future of television.

“If we were at the end point on this,” Mr. Gates said recently, “we wouldn’t still be investing $6 billion [or more] a year in [research and development]. I can say with great confidence that throughout this decade a very high level of investment will make sense as we bring more intelligence to the devices, as we bring automatic management to them, as we conquer those new scenarios. We see a lot of milestones on the way. But there is plenty of work still to do to build the ultimate tools for the Digital Decade.”

Microsoft recognizes that no company, no matter how large, can go it alone. It isn’t just about money. There has to be a critical mass of interest, involvement and support to launch a format, to popularize a device, to expand a market. Microsoft doesn’t want it all, but whatever direction television takes, it is determined to be in the mix.