TECHSHOW-Microsoft IPTV hits million mark, eyes more growth

By Daisuke Wakabayashi

LAS VEGAS, Jan 6 (Reuters) - Microsoft Corp (MSFT.O: Quote, Profile, Research, Stock Buzz) expects its Internet-based television platform to get its one millionth customer in the first quarter of this year as telephone companies taking on cable and satellite carriers roll out the software service.

Microsoft has spent the last decade trying to crack the TV software market with billion-dollar investments in cable and telecom companies, numerous attempts at set-top box technology and the acquisition of WebTV, a service to allow people to browse the Internet through a TV set.

The investments did not pan out, but analysts see this latest milestone as an improvement. The newest set-top box technology, called Mediaroom, delivers TV over high-speed Internet networks using Internet Protocol Television (IPTV) software.

"Passing a million set-top boxes, that's a pretty significant mark even if it's on a global scale," said Vince Vittore, senior analyst at Yankee Group. "This is validation that they are in the market and a viable competitor."

AT&T (T.N: Quote, Profile, Research, Stock Buzz), the largest U.S. phone company, plans to offer its Mediaroom-based U-verse service to 30 million homes by 2010 compared to an earlier plan for 17 million homes with access to the service in 2008.

The phone company has said it expects to end 2008 with more than 1 million U-verse video customers. Microsoft has already passed one million set-top boxes, since some customers already have more than one box.

German conglomerate Siemens AG (SIEGn.DE: Quote, Profile, Research, Stock Buzz) beat Microsoft to market with small IPTV roll-outs in Europe and Asia, but 13 telephone carriers around the world including AT&T, BT Group (BT.L: Quote, Profile, Research, Stock Buzz) and Deutsche Telekom AG (DTEGn.DE: Quote, Profile, Research, Stock Buzz) have deployed Mediaroom with another eight carriers testing the service.

Enrique Rodriguez, who heads Microsoft's TV business, said reaching one million customers shows that concerns about the service's ability to expand are unfounded and the task now will be to sign up more operators and move into new markets.