No Room for Two?

They have marched in virtual lock-step to their positions atop the computer industry, but Microsoft Corp. and Intel Corp. appear to have parted ways as they move toward what could be the next digital empire--the living room.

Microsoft was conspicuously absent from an Intel-led group of high-tech powers that banded together last week to support specifications for the next generation of television set-top boxes.

The rift was seen as an illustration of how new alliances are taking shape as computer and communications companies jockey for position in their converging industries.

The cable television industry is in the midst of an effort to adopt specifications for a new breed of set-top boxes capable of combining a growing array of digital content and services, including e-mail, chat, the Web and television programming.

Microsoft, whose software runs on about 90% of the world’s computers, has ambitions to seize a similarly dominant position in the world of set-top boxes.

“Microsoft has truly turned its attention to the living room,” said Gary Arlen, president of the Arlen Communications research firm in Bethesda, Md. “They want to embed their technology in such a way that you can’t operate without something of theirs in there.”

The company has spent billions of dollars in this pursuit. Microsoft paid $425 million earlier this year to buy WebTV Networks, which makes boxes that let users access the Web through their TV sets. A few months later, Microsoft invested $1 billion in Comcast Corp. in a move many saw as an attempt to buy influence in the cable industry.

Nevertheless, Microsoft was rebuffed in an attempt several months ago to convince the industry to adopt technology standards that would use Windows CE, its operating system for portable devices, as the critical software for controlling set-top boxes.

Instead, CableLabs, the industry’s specification-setting body, invited input from others in the computer industry, setting last Friday as the deadline. Dozens of proposals poured in, including one backed by Intel and a list of companies often considered Microsoft enemies, including Netscape Communications Corp., Network Computer Inc. and Oracle Corp.

Microsoft submitted a separate proposal by itself. Company officials declined to explain why.