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Microsoft Makes Its Move

Jobs Action

"If there's one guy who is going to try to put everything together ... Steve and his team have one of the unique opportunities," Tim Bajarin, president of tech consultancy Creative Strategies, said of Apple CEO Steve Jobs at a recent digital living room conference.

"Look at the Front Row interface they created -- you can see digital living room written all over it," he added, referring to Apple's interface for viewing digital media.

And then, of course, there's Apple's huge success with music and recent deals to sell video content from NBC Universal at its iTunes music store.

Similarly, Sony is in a unique position to take over the digital living room, given its position in the consumer-electronics space, the success of its PlayStation video-game console and its music and movie businesses.

And finally there's Internet search leader Google, which announced also at CES that it will begin allowing consumers to buy videos from major content partners through its Web site.

Before IPTV, Microsoft's rolled out the Media Center version of its Windows OS to connect TV and PCs. But Media Center PCs have gotten off to a slow start in part because they were bundled with a preinstalled TV tuner, which increased their cost, Scherf says.

Microsoft recently announced that 6.5 million Media Center PCs have shipped in three years, with 5.5 million of those shipping in just the past year.

"The important thing to understand about that is that the majority of those units are not going into the living room," adds Gartner media analyst Van Baker. He estimates that fewer than 10% of Media Center PCs are connected to a TV set. And adds that they're still a "pretty tiny" portion of overall PC sales.

The problem: PCs simply aren't stable enough to take over the role of the beloved TV. "If you're in the middle of your favorite TV show and you get the blue screen of death, you're going to go crazy," Baker says.

Despite that, Microsoft is still aiming to bring television to the PC, with announcements last week about connecting DirecTV (DTV) video onto Windows Media Center PCs.

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