The Clicker: A sitdown with Joe Belfiore (Part II)

Every Thursday Stephen Speicher contributes The Clicker, a weekly opinion column on entertainment and technology:

This week we conclude our interview with Microsoft's Joe Belfiore. If you didn't read part one, we'll wait as you go catch up. Last week we talked about CableCARD, HD-DVD, and little of the history behind Media Center. This week we continue with Joe's thoughts on open vs. closed-box development, DRM, and the future of the industry.

[On open vs. closed box]

Stephen Speicher: How much are you hindered by an open-box [i.e. a PC] vs. a closed-box [e.g. TiVo] approach in your normal-use scenario? It's wonderful to say that it's a powerful box that can do anything. However, at some point it's too powerful, too open, and too expensive to make sense for the average consumer.

Joe Belfiore: I think this is a very interesting question. There are definitely trade-offs that we make in taking the approach of focusing on the PC. I'll talk about some of the positives and then I'll talk about some of the negatives too.

On the positive side, if you look at industry-player participation -- whether it's third-parties writing apps, the retailers training their salespeople about how to talk about your product, etc. -- the driving force is very often volume. If you try to create a brand-new device-category and don't have high volume, then it's very very difficult to get all those [industry] entities participating and helping to make the product go. One of the things that I think has been terrific in focusing on the PC has been that it's an incredibly high-volume phenomenon and all these players in the industry already expect to participate. The PC is a way that we can reach a ton of end-customers. It's a way that we can get a lot of third-parties writing applications. So, there's a lot of benefit in that.

Another benefit is that consumers expect to go buy a new computer about every four years and they expect it to have new, exciting capabilities. So, the idea that the PC will evolve in this way isn't foreign to consumers. For instance, if [Microsoft] says we're going to make your computer great at helping you get to your music, get to your pictures, or watch TV with a remote control…, at first people say ‘That seems odd.' But they're used to the PC evolving to do new things. Even if you look at the PC being able to do TV, the US is way behind many other countries in the world. In Japan, over 80% of the desktop PCs include TV capabilities and have for a long time. The same is also true in Germany. My point is that consumers are willing to embrace the PC doing more and more things. So, there's been a lot of advantages for us in making the PC more capable. You get a very powerful device. You get an open platform. You get partners that can benefit and get behind it.

Continued...

The other thing that's sort of implied in your question is the drawbacks in it. Well… it's relatively expensive compared to a consumer electronics device that might only be a couple hundred dollars. It's potentially unreliable. To the degree that you: install a whole bunch of stuff on it, you browse the web, let spyware on it, etc. – you can expose yourself to reliability issues in a much greater way than you can on a closed-box device. However, that's probably only true in the extreme. Let's take the Media Center I have at home in my entertainment rack. I really value being able to browse the web [and other light-use duties]. Even moderate flexibility is incredibly valuable, and I don't think that it carries too much reliability risk with it. For instance, to play a published game like Half-life or Halo on the PC doesn't really affect your stability in any appreciable way, but that added flexibility really is nice.

The other thing too is that the same argument was made, could be made, and could have been made about browsing the Internet and doing e-mail as a dedicated function. If you go back to 1996, there were a lot of people who thought ‘The PC is in big trouble.' Consumers will not choose that expensive general device when they can get a much simpler, less expensive Internet terminal/email device. In fact, the market hasn't gone that way. Consumers are willing to spend $1000 periodically. They value generality and the theoretical ability to do something even if they don't have it today. Although it does come at a cost.

I do think that, as we keep going, the whole extender effort is one way that we try to strike a balance here. Running Media Center and getting that value only through your PC locally has a certain set of value, but then being able to have low-cost, high-reliability, consumer electronics devices that derive value from the PC is also super-compelling. I've found that that's actually a very good balance. If you have a home network, [by placing an extender] where your TV is, you get a device that's incredibly reliable and it's doing all the work of video decoding. All the PC is doing is running an app (which BTW it's very good at). That's a pretty good balance.

That said – our group did software work last fall to enable LG electronics to ship a standalone consumer electronics device, the Media Center DVR. So, we definitely take a broad view of the question, and my honest opinion is that so far today it's been more valuable for us to focus our software development and partner-enabling on the PC then it has been on some closed device. But, maybe we'll hit some point in time where that's not the case anymore.

SS: So it's been asked since the original Xbox shipped. As such, it's almost passé, but I'll still ask… Why not [the Xbox as that standalone box]?

JB: I think that putting native extender into the Xbox 360 is a terrific and valuable step towards really letting consumers choose a device that has great stand-alone value in playing games and all the other things that Xbox now does as a stand-alone device while adding a very rich entertainment experience. So, where we are right now is still very focused as the Xbox being primarily a terrific gaming device -- which it is! -- and adding to that reasonable, understandable, low-cost ways of letting it do great things with entertainment. And that's what you've see us do with extender. Where we go in the future – who knows.

SS: You say “right now” – any plans? Do you see that happening?

JB: I definitely expect that we'll continue to invest in the Xbox being able to do a wider range of entertainment stuff. Although we don't have any specific plans around specifically doing something like making Media Center run on the Xbox.

[On DRM]

SS: Microsoft has always been a leader in the Digital Right Management (DRM) space. Media Center Edition was one of the first PVRs to observe the CGMS-A flags and you're now working with CableLabs to protect digital content too. What would you say to those who say that Microsoft should be more pro-consumer in the DRM space?

JB: I feel very deeply and am hugely motivated to try to deliver the best possible product to the end-consumer and, honestly, it pains me to hear that people think that we, Microsoft, aren't focused on that as a primary objective. I can say for me personally and for my team: our #1 mission is to deliver a product that will be exciting and compelling for our end-users. One of the things that's tough in observing what we, Microsoft, do relative to that is the trade-off that one makes in terms of whether (or how) you bring the industry with you vs. whether you fight with them. Let's take Media Center as an example. Given the trade-off of Media Center not having terrific content like NFL Sunday Ticket or HBOHD and being shut out vs. working collaboratively with the content providers who own that content to find the right balance between their needs/concerns and what's valuable to end-users, [we feel] it's a huge value that we can bring [by working with the providers].

While many of your readers might look at our actions and say “I wish you were doing more for me”, I would say -- trust that we are doing everything that we can to make this as good for you as possible, but at the end of the day we have to do it in a way that's collaborative with the rest of the industry, And our view on this is a long-term one. The cable industry is taking a significant step forward for them in offering some of their best content to be available on the PC, and we want to show them what a terrific business opportunity this can be for them and what a great experience it can be for end-users. And we think that, over time, we'll see more and more of that kind of stuff happening. So, participating constructively is the best way to deliver the best value to end-consumers.

[On the Future]

SS: Where do you see the industry going?

JB: There's going to be so much exciting stuff that happens in the next 2-5 years. A lot of this is obvious. I don't think of myself as a big long-term predictor. I'm more of a pragmatic incrementalist. With that said…

I think we're going to see content-providers/content-creators increasingly trying to make their content available directly to consumers through the web, and the announcements are coming from the broadcast networks and content creators bi-weekly. They're happening all the time. So the trend is clearly happening. As a result, we'll see cable and satellite do lots of innovative things to show that their value-add is more than just a pipe to deliver content. They'll aggregate effectively. They'll help you discover stuff. They'll tie things together in service packages that are inexpensive, compelling, and ease to use. I think that we'll see them invest more in the PC as a result of the fact that content providers will go directly to the PC.

I hope and think that we'll see home networks start to become prevalent. That's a critical thing for our vision in Media Center. That's going to take new home-networking technology, but it's also going to take non-technology related efforts like folks such as Best Buy (and other big retailers), the cable-industry, telcos, etc. to help people get networks installed. I think that the role of all those players in helping to make that home infrastructure happen will be really interesting to watch in the next few years.

I think that we're going to see more and more consumer awareness and desire around content flowing through lots of devices, and that will become, at some point, a critical decision point in what services and content consumers choose to use.

We're going to see interactivity in TV with the remote in a way that people have had visions about and dreamed about for a long time. It's really going to happen in the next 4-5 years.

None of this stuff is that hard to predict, but it always takes longer than people imagine it will. I think that we're really getting there.

[Wrapping it up]

SS: If you could leave the readers with one last thought, what would it be?

JB: For Engadget readers – I'd say, #1, thank you for your support, suggestions, and feedback; we value it hugely. Thanks for being brave enough to try stuff when it's early. And, for all those folks that haven't done that yet, take another look.

If you have comments or suggestions for future columns, drop me a line at theclicker@theevilempire.com