Microsoft's Radical Shift: From Software to Content Provider

Strategic Insights -

As the US software giant Microsoft continues its acquisition spree of strategic holdings in broadband cable operators, it is transforming into a content provider, poised to become one of the 21st century's most powerful media companies. The company's shift, driven by the vast revenue potential of the mass media market, marks a radical departure from its traditional business of selling software for personal computers. Microsoft's new focus on content delivery has significant implications for the telecoms and broadcasting industries, with the company positioning itself to take an early lead in the new media landscape.

Key Takeaways:

  • Microsoft has acquired holdings in several broadband cable operators, including Comcast, NTL, UPC of the Netherlands, Portugal Telecom, MediaOne, and Nextel.
  • The US software giant is transforming into a content provider, seeking to tap into the vast revenue potential of the mass media market, which generates $20bn in annual revenues.
  • Microsoft is developing interactive multimedia products and working to establish a network of distribution channels through holdings in broadband cable networks across Europe and the US.
  • Cable is being favored as a delivery mechanism for Microsoft's new broadband services due to its high network penetration and almost unlimited bandwidth.
  • Analysts believe that Microsoft's strategic investments in broadband infrastructure position it to become a major player in the new media landscape.

Statistics:

  • Microsoft has acquired holdings in 7 broadband cable operators across Europe and the US.
  • The mass media market generates $20bn in annual revenues, compared to $30bn in software revenues worldwide.
  • Cable penetration is high in European markets, with over 92% of British homes passed by cable and over 56% in Scandinavia.
  • BT's ADSL service is expected to go online in parts of Britain from March 2000, with a progressive roll-out to other areas later.
  • ADSL technology can deliver information at speeds up to 2Mbps but is dependent on the user's proximity to the exchange.

Sources:

  • Financial Times Limited 1999. All Rights Reserved.
  • The article cites Alan Yates, director of Microsoft's WebTV division; Steven Wagner, a senior manager at NTL; Stephen Temple, NTL's director of network strategy; Alain Puissochet, a senior analyst with the Institut de l'audiovisuel et de la telecommunication; and other industry experts.