Microsoft, Cable Industry Agree On Cable-Ready PCsMicrosoft, Cable Industry Agree On Cable-Ready PCs

Microsoft Corp. and Cable Television Laboratories Inc., a cable industry consortium, said Wednesday they have reached an agreement that's expected to lead to Windows Media Center-based PCs that are digital-cable ready.

As a result of the deal, cable programming could be fed directly into a PC, eliminating the need for a set-top box. Such consolidation in technology is another step toward Microsoft's vision of the PC as a home entertainment hub.

Expected by next year's holiday shopping season, the new Media Center PCs would ship with the consortium's CableCard, a hardware module that enable a device to decode encrypted, or scrambled, content delivered from the cable operator. As a result, the PC would be capable of playing high-definition and other cable programs, or sending the signal to another network-connected device. Microsoft's new Xbox 360 is an example of such a device.

Cable Television Laboratories, or CableLabs, is a non-profit research and development consortium founded by cable operators in 1988. The group has developed hardware and software specifications under the OpenCable project that enable manufacturers to build retail devices capable of supporting multiple cable networks.

Today, such devices are primarily limited to cable-ready TVs. Digital video recorders and less-advanced set-top boxes are sold by the cable operator.

Consumers, however, are increasingly demanding that cable programming play on more retail devices, such as PCs, so the cable industry is moving in that direction by delivering a standard platform to hardware manufacturers.

"It's a business necessity," Don Dulchinos, senior vice president of advanced platforms for CableLabs, said. "It's what the customer wants, and you have to serve the customer." In the Microsoft deal, CableLabs is evaluating the Redmond, Wash., software maker's copy-protection technology, which will have to meet certain industry criteria. If approved in a few weeks as expected, Microsoft's Windows Media Digital Rights Management system would be the first DRM system approved by CableLabs.

Following DRM approval, Microsoft and its manufacturing partners would have to deliver a product for CableLabs certification, Dulchinos said.

Along with Microsoft, Apple Computer Inc. also has its eye on the home-entertainment market. The computer maker is pushing the Mac as a potential entertainment hub, but has yet to formally begin work with CableLabs, Dulchinos said. The Microsoft agreement took more than two years to complete.

The market for so-called “home media servers” that act as entertainment hubs is expected to show modest growth through 2008, increasing from 6 million units last year to 31 million, according to In-Stat. In 2008, two thirds of the units are expected to be consumer electronic-based, such as DVRs, with the remainder based on the PC.

Nearly half of U.S. households are expected to own DVRs in five years, as cable and satellite companies heavily market them to consumers, according to JupiterResearch. The installed base is expected to increase to 55 million households by 2010 from 7 million last year.

From the cable industry's perspective, the PC is seen as a secondary device, one that some consumers may want to use to watch television when they're away from their primary entertainment center, Dulchinos said.

"It's a secondary outlet from a cable industry perspective, but it's something people are coming to expect," he said.