Microsoft Chases Interactive TV

INSIDE one of the sprawling buildings on Microsoft Corporation's tree-studded "campus," Sanjay Parthasarathy shows off software that looks much like the company's popular Windows operating system for personal computers. But it is not for a computer and no keyboard is in sight.

He is using this software, dubbed Modular Windows, to control a television set using a typical remote-control key pad.

He shows how, by pressing a few buttons on the key pad, a viewer might order tickets to hear a band whose song just played on the MTV cable channel.

Switching to a sports channel, he wants to find out the score of a baseball game and some background statistics on the player at bat. Instead of having to wait for such information to be presented, he hits some more buttons and it appears on-screen.

The menu of options on the screen looks familiar to anyone who has used a computer with an electronic "mouse" and Windows operating environment. And that is precisely why Microsoft hopes it can play a big role in this potentially huge emerging market: interactive television - the convergence of television, computing, and telecommunications.

"Everybody knows it's big," Mr. Parthasarathy says. "The challenge is to find out what people want and whether they can pay for it."

As product manager, his work is part of Microsoft's strategy to produce many "flavors" of its highly successful Windows product, which is an operating system, or underlying software on which other programs run. By summer, for example, the company will introduce Windows NT, a high-end version. Modular Windows moves in the opposite direction, aiming at the market for cheap, simple devices in people's living rooms.

Hundreds of software developers are used to writing programs to run on Windows, and Microsoft hopes familiarity will breed popularity in this new area.

"They've certainly got quantity on their side," says Nick Arnett, president of Multimedia Computing Corporation in Campbell, Calif.

Despite the high ground it holds in computing software, Microsoft has work to do if it wants to be the leading supplier of software for 21st-century home-entertainment centers.

This software will be an "incredibly lucrative area," and numerous companies are trying to supply it, Mr. Arnett notes.

"If anybody's the top dog right now, it's got to be 3DO," he says, referring to a San Mateo, Calif., start-up. A key strength is the company's partnership with Time Warner Inc. Since successful entertainment products will be critical to sales of software-controlled devices, the media giant's backing should give 3DO clout. Matsushita, the leading consumer-products hardware manufacturer, and AT&T are other 3DO partners.

Analysts say the possibilities of interactive TV will reach consumers only gradually. This is because huge investments are required not only to create new entertainment and information products but also to accommodate the greater flow of information over phone lines and cables.

Already, however, TV sets are used interactively when compact-disc players and other devices are hooked in to play video games or educational software. 3DO rolled out a new CD-based machine last week.

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