Set-top Box Operating System Wars Heat Up

In an effort to dominate the potentially huge set-top box market, both Sun Microsystems and Microsoft announced deals with cable provider TCI at the recent CES in Las Vegas. Coming within one day of each other, the two announcements illuminate the struggle about to take place between rivals Sun and Microsoft to place their operating systems in consumers' homes.

TCI is working to provide two-way digital communication throughout its cable system. Roughly half of TCI's 14 million customers have already been converted to digital; complete coverage is expected within three years. But the big question remains: Is this what consumers want?

A set-top box's primary function will be to add integrated web surfing and two-way digital communication with entertainment-programming providers (such as TCI) to the user's TV. Currently, WebTV, with a little over 250,000 units installed, leads the pack in providing internet hookups to consumers' TV sets. But as the cable providers begin to offer internet browsing, e-mail, secure transactions, and digital TV options with their services, they could add millions of subscribers by the end of the century.

At least, that's the idea. Some companies, such as Time Warner Cable, plan to use yet other operating systems, suggesting that the open hardware and software standards planned by CableLabs (the cable-industry research and development organization) for the set-top business will make it hard for any one company (such as Microsoft) to dominate the entire market. According to CableLabs' Don Dulchinos, "Our intention is to have any third-party applications work on any operating system. The ultimate control of what applications run on the box will be under the control of the cable company, not the operating-system vendor."

Meanwhile, the fight will begin between Sun's Personal Java OS and Microsoft's Windows CE, with other OSes from Oracle/Netscape's NCI and OpenTV in Europe. Sun feels it may have the edge, due to the "write once, run anywhere" nature of its OS. Commented Sun's Curtis Sasaki: "We're envisioning a lot of third-party developers building applications in Java." But, of course, Microsoft has plenty of developers in its camp as well. There may be many twists and turns along the path before it straightens out.

Still to come: What features do consumers really want added to their standard TV fare, and how much will they pay for them? Stay tuned.

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