Microsoft Announces New Media Center Extenders and Internet TV Beta

[Jeremy Charette]

<div class='os_post_top_link'><a href='http://money.cnn.com/news/newsfeeds/articles/prnewswire/AQTH07527092007-1.htm' target='_blank'>http://money.cnn.com/news/newsfeeds/articles/prnewswire/AQTH07527092007-1.htm</a><br /><br /></div><i>""We are excited to reveal the first series of totally quiet, cool, and sleek-looking Media Center Extender devices, designed to deliver the ultimate entertainment experience to every TV set in your home," said Joe Belfiore, corporate vice president, Entertainment and Devices eHome Division, Microsoft. "These products are the initial third-party devices that can wirelessly connect a TV with a PC, with features including live high-definition TV, PVR, movies, pictures, music and online services. In addition, the Internet TV beta allows Windows Media Center as well as Extender users to enjoy free* high- quality television from some of their favorite studios and networks in Media Center, directly over the Internet.""</i><br /><br /><img src="http://www.digitalmediathoughts.com/images/extenders.jpg" /><br /><br />I'm happy to see this Internet TV beta, as well expanded support for xVid, Divx, and h.264 video; but I think Microsoft is going about this in totally the wrong way. There are over 10 million Xbox 360s out there, all with Media Center Extender functionality. The 360 is vastly more powerful than any of these upcoming 3rd-party extenders. The only thing it lacks that some of these new devices bring to the table is Wireless-N support. (Oh, and those video codecs listed above...though the rumor mill suggests they might be coming soon.)<br /><br />My suggestion to Microsoft: market the hell out of the MCX capabilities of the 360. There are tens of millions of copies of Vista Home Premium out there on OEM computers, and an untapped market of users who have your product, but probably aren't even using it. Show them what MCE and the 360 can do. Setup store demos, have promotional events in major cities, blitz primetime TV with ads showing off all the cool things MCE does...do something. Media Center is a fantastic product with one huge problem: lack of consumer awareness. Come on Microsoft, you have an army of trojan horses in living rooms around the world. Unleash them on the masses.<br /><br />As for the upcoming MCXs? In my experience at DigitalLife, they were slow and not very responsive. Played back WMVHD smoothly however. The prices are ridiculous. Starting at $299, they are $20 more than the base Xbox 360 SKU. They will never see the economies of scale that the 360 will, so prices aren't likely to drop by much, nor anytime soon. A good lineup of products designed to serve a very very small slice of the market.

[Felix Torres]

I think Microsoft is going about this in totally the wrong way. There are over 10 million Xbox 360s out there, all with Media Center Extender functionality. The 360 is vastly more powerful than any of these upcoming 3rd-party extenders.

I'm a big fan of the 360 and of its MCX features.
I think MS should push them more.
But...

There is room for all *three* approaches.
MS, correctly, sees MCX as a *feature* and not a product by itself.
Some of the new boxes come with built-in Wi-Fi and DVD playback and likely will be discounted far more than the 360 will anytime soon. Some have extra features like Internet radio. Yes, they are niche products but they are niche products that support the MCX standard instead of somebody else's.
Plus, there are people who would never buy a Microsoft product but will buy Dlink, Linksys, or HP.

Most interesting to me, though, is the MCX TV.
Modern TVs are pretty much computers unto themselves and many are coming with USB and Ethernet. Some even feature WiFi.
Now, think about it; to use an XBOX as an extender you need a PC, an XBOX, and a TV.
If you get the MCX client app into a TV it will likely add minimal cost but add true, visible extra value. Get it into enough TVs (and low-cost DVD players) and suddenly the InternetTV channel becomes more appealing to content providers.

You need all three pieces: the conduit--the MCE PC; the client--MCX; and the content. Lining all three up to create a desirable product is tricky. You won't get content until there are clients--you won't sell the client by itself without the content.

MS is just trying to get as many clients out there are possible; wrapping it up inside the 360 will get it into a lot of places but wrapping it into TVs or DVD players can be just as effective. So why not do all three?

[Jeremy Charette]

I think it's cool.

But I don't think it will sell.

The new MCXs are too expensive. Lost cost manufacturers aren't going to enter the fray, nor should Microsoft let them.

HP's TVs are very neat, no doubt, but will also command enough of a price premium over competing televisions to effectively price themselves out of the market. Remember, flat panel TVs are well into the commodity phase, and low price is king. You won't find Circuit City and Best Buy hawking MCX HDTVs in Black Friday circulars, you'll find 2nd and 3rd tier 42" TVs for $600, 32" TVs for $300.

The problem is that the hardware vendors don't have a stake in content sales. Their only source of revenue is hardware sales. As Apple demonstrated with the iTMS, the money is in content sales. Microsoft is the only one who stands to profit from content sales at this point, so they should own the hardware as well. Third party vendors also won't see the kind of sales volume they need to drop prices quickly. (Although they also aren't as price-locked as first party hardware like the iPod or Xbox 360.)

For a niche market, these products are fine. The price points are high, but early adopters will pay them. They just won't sell to the masses, and I think that's a shame.

[Jason Dunn]

As Apple demonstrated with the iTMS, the money is in content sales.

Wait, I thought Apple was making their money off the hardware sales of iPods, because they barely make any money off iTunes?

[Jeremy Charette]

They make a boatload of profit on the hardware, no doubt, but the steady stream of income comes from content sales. It's the same model as the video game industry: make a tiny profit on the hardware (or take a loss, more often), and make it back on game sales. Or give away the razors and make money on the blades.

Apple is the exception, they've been able to profit on both, but for Microsoft, the money really has to be in content, not hardware. As it is, they have to underprice the hardware to catch up with the iPod, or the Apple TV.

[possmann]

I'm in the camp of don't fragment yourself too greatly - you will loose the ability to push ahead...
I cannot agree more with the comments of just buy and XBOX360, buy a Vista Home Premium PC and connect the two. What a way to increase license in the OS world and at the same time really start to pour 360's out there to capitalize on proven success: Markeplace, Live, Game licenses etc...
I just think these dilute the drink and will give everyone a bad taste or at best a "ho-hum" taste in their mouth.

[Jeremy Charette]

I just think these dilute the drink and will give everyone a bad taste or at best a "ho-hum" taste in their mouth.

Bingo. Well said.

Like I was trying to say in my other article, it's about creating a brand and making sure the user gets a consistently good experience. MS didn't do that with PlaysForSure, and the result was a huge mess and mass confusion.