Microsoft Develops Chip for Interactive TV

From Bloomberg News

Microsoft Corp. and its WebTV unit are developing a computer chip to be introduced in the fall that will power the company’s new interactive television service.

The Solo2 chip, being manufactured by Toshiba Corp., also can be employed in other devices and services that use the Internet, graphics and video. It will be introduced in TV set-top boxes for Microsoft’s new Ultimate TV service, which revamps the older WebTV service to focus more on features such as digital video recording and interactive TV.

The new chip, which is being worked on by a team of about 50 developers, allows viewers to do things such as record two programs at once. Redmond, Wash.-based Microsoft plans to license the technology to other semiconductor and set-top box companies.

Microsoft said it developed the chip itself because no existing product met its specifications. It cost less than $20 million to design, according to Tim Bucher, vice president of WebTV Consumer Products. WebTV has developed chips for earlier versions of interactive TV boxes, he said.


“We always keep our eyes out for off-the-shelf chips we can use, but because we’re creating these new categories of services rapidly, there aren’t always things available,” he said.

Microsoft has begun a companywide strategic initiative to shift its focus to Web services and computing devices such as Web-enabled interactive television, cell phones and hand-held organizers. Still, Web-enabled television hasn’t caught on with consumers, analysts said, and Microsoft’s first foray with the original WebTV service has attracted only a little more than 1 million subscribers.

WebTV now is refocusing its efforts on the Ultimate TV service, which offers more features than the original WebTV service, and on licensing its software to cable-TV companies that want to offer their own interactive television services, including AT&T; Corp. and United Pan-Europe Communications.

By licensing the Solo2 technology to TV equipment makers, Microsoft can ensure there are other set-top boxes on the market that work with its Ultimate TV service.


Microsoft shares fell 50 cents to close at $70.75 on Nasdaq.

The development of the chip was reported earlier by the San Jose Mercury News.