CES 2008

Microsoft Xbox 360 and Microsoft Mediaroom Begin to Move Forward with Integration Plans

| Jan 8, 2008 | Digital Home - U.S. | Show Update

| Analysts: Larry Hettick, Bruce McGregor

Current Perspective: Positive/Neutral Vendor Importance: High Market Impact: Low/Moderate

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Event Summary

January 6, 2008 – Microsoft announced that the company is working with British Telecom by bringing together the IP video service, BT Vision, with Microsoft’s Xbox 360 games and entertainment system. All BT broadband customers will have the unique opportunity to receive high-definition gaming, television and movies through an Xbox 360 console with an all-in-one entertainment experience. BT Vision, which is powered by the Microsoft Mediaroom Internet Protocol TV (IPTV) platform, plans to make the device and service offering available to customers sometime in the middle of 2008.

Analytical Summary

• Current Perspective: Slightly positive on Microsoft’s announcement at CES that indicates the Xbox 360 can soon be used as an integrated media center targeted to customers who have both an Xbox 360 and BT’s Vision IPTV service, because it provides both Microsoft and BT with additional stickiness to customers in this niche home entertainment market. Additionally, it proves interoperability between the Xbox 360 and Mediaroom to other service providers, such as AT&T who is similarly using Microsoft Mediaroom with its IPTV service, U-verse.

• Vendor Importance: Moderate to Microsoft, because while having cross-platform interoperability between the Xbox 360 and Mediaroom products is a much needed step toward cross-departmental integration, neither platform will rely heavily on the other to sustain material sales volumes. Microsoft’s delivery of home entertainment services is right now divided into three silos: Xbox 360, Mediaroom and Windows Media Center. All three of these platforms come from different origins inside Microsoft to appeal to the consumer through a specific device, the game console, set-top box and PC, making a bridge between them vital for the future.

• Market Impact: Low on U.S. service providers selling to digital home consumers since it will initially only be available to BT Vision customers in Europe that own or want to own an Xbox 360. However, it is important to note this announcement shows progress towards a Microsoft cross-platform solution for IPTV services, but the universe of users who use both the Xbox 360 and Mediaroom software through their service provider is minimal.

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Current Perspective

Competitive Positives and Concerns

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