Bach: Wireless key to future entertainment

Interview: Robbie Bach discusses Microsoft's plan to help users untangle the web of products for the digital home

Microsoft Chairman Bill Gates's keynote this year at the International Consumer Electronics Show (CES) put the company's newest power broker at center stage: Robbie Bach, president of the Entertainment and Devices division. Bach is the man behind Microsoft's Xbox, which at the time of its launch was a big risk and departure for the company. Xbox has gone on to become one of Microsoft's most successful consumer products, and Bach now is in charge of charting Microsoft's future strategy to give consumers real-time, always-available access to content over IP networks.

IDG News Service Senior Writer Elizabeth Montalbano sat down with Bach just before his keynote appearance. He discussed Microsoft's plan to help consumers untangle the web of products for the digital home, how wireless connectivity will factor into the company's "connected entertainment" vision, and the continued dilemma of digital rights management (DRM). An edited transcript of the interview follows.

IDGNS: What does the digital home experience look like two years from now, and how is Microsoft delivering on that vision?

Bach: I think the digital home experience two years from now will have a couple of characteristics. One, I think you're going to see dramatic changes in individual categories. In music, we're seeing dramatic changes. You're seeing that in video and TV delivery, you're seeing that in the video game space. Lots of different changes where digital technology is really reshaping the way people think about entertainment.

The second thing you'll see over that two-year period is, you'll see some of those experiences start to blend and merge. The idea that music and video games can interact; the idea that I might have one device that can help me with video and games; and the idea that there might be services that apply across those different ecosystems, I think, is pretty powerful. You'll see that happen over the next year or two. But ultimately, you get out four or five years, you'll start to see services in the [network] cloud. So you might not have a hard disk locally in your house. All of your data might be stored someplace else off premise by somebody else, and you just have access to it. I think you're going to see those kinds of applications.

IDGNS: Can you talk about how the specific products in your division -- such as Xbox, Zune, IPTV, and Windows Mobile -- will fit into that?

Bach: In my group, there are several ways that plays out. For example, we're taking our Xbox Live service and bringing those Live services to Windows. Now the Windows gaming community and the Xbox gaming community are one community. If you take IPTV, which is the idea that people like AT&T, British Telecom, Deutsche Telekom can deliver services into the home, we're going to talk about expanding that so you can actually use Xbox 360 as the set-top box for IPTV. That is a very powerful solution.

IDGNS: How does the Windows Home Server fit into this?

Bach: That's another need that you have in the home, which is, I have to protect all of this data, I have to file it, I have to edit it, I have to sort it -- how to make that management all easy. Literally, you have hundreds of gigabytes of data in the home. I know it sounds funny to talk about it that way, but that's what you have. You want to use the Home Server product to manage and control that.

IDGNS: Your vision of connected entertainment includes various sophisticated device-interaction scenarios. Right now, you've got Zune-to-Zune interaction with wireless capability, and there's been talk of Zune-to-Xbox wireless connectivity.

Bach: Ultimately the wireless capability in Zune opens up a whole set of opportunities for us. Our goal with wireless in Zune, when we launched it a few weeks ago, is to make sure it's in every device. Right now it's about peer-to-peer sharing, but certainly once you have the wireless radio, then you know there are other things we can do in the future.

IDGNS: You've said Zune will be a long-term investment. How much time will you give Zune to make inroads against iPod before you think it's not working?

Bach: The thing you have to realize when looking at the data is, we're only in one MP3 category. Apple has six or seven products across a bunch of price points and five years [of a head start]. When we look at it, we look at, "Hey, in our category, we're actually the No. 2 MP3 player." We think of this holiday as being very successful. We can build from this foundation piece.

It's very analogous to what happened with Xbox. The first holiday we did a certain number of units and people said, "Well, that was interesting, but how interesting was it?" The next holiday we did more, the next holiday we did more, and suddenly people said, "Wow, these guys are going to take on Sony." And now, 10.4 million consoles for Xbox 360 later, we're the leaders for the next generation. I think people have to think about it in terms like that.

IDGNS: Would you say the wireless connectivity is the differentiator for Zune, especially as you extend that?

Bach: That's certainly one of the things we think is a differentiator. We also think music should be about a community. The iPod experience is very much about the "I," it's very much about me with my music, listening to myself and not paying attention to anybody else. Our view is that Zune needs to be about the community experience of music, the social aspects. That's why sharing through wireless is so important, that's why our online presence is going to be more than a store. So you're going to see plenty of opportunity for us to differentiate.

IDGNS: One reason why people speculated IPTV was slow to take off was that media business leaders, network operators and cable companies were cautious about letting Microsoft be a sort of gatekeeper. How have you won over content makers? What did you have to do on the business side?

Bach: It never was a business issue. The key thing you have to communicate to people is to deliver them the confidence that you can bring the technology. What people realized was that the fundamental technology in IPTV is very complicated, and it required someone who understands world-class client/server applications to do it. It's not something that your average set of companies could cobble together. Microsoft really does have the skills to do that.

The second thing is, people have to recognize it's not our IPTV service. We went to people and we said, "Look, this isn't our service, this is your service. We're providing the technology. What do you want in the technology? How do you want that to work?" We did an extensive process in letting them be involved in early tests, help direct the feature set, help direct the product. Once they realized it was their product and not our product, and that we were providing technology to them to be able to do it, that really made it much easier to make progress.

IDGNS: Xbox is by far your most successful product, and at the time it was a departure for Microsoft. What's the next killer app or killer device that will come from your team?

Bach: I think more now, what we're focused on is taking the businesses we have -- whether that's the mobile phone business or the music business or IPTV and the work we do in Media Center and Xbox -- and really growing those into world-class businesses. Each of them is at, frankly, a different stage of development, and they have different challenges and different opportunities, so they each are kind of individual businesses. So for the foreseeable future our focus is on building and fleshing out those businesses.

IDGNS: I want to switch gears to DRM. I know this is a huge issue. Can you talk about Microsoft's approach and where DRM in general is headed?

Bach: I think there are a couple things going on in the DRM space. The first thing I want to say is, we want to produce the DRM that the content industry wants. One of the things you have to understand is who's in charge of what feature set is in the DRM itself, and generally it's the content providers. It's their content that's being protected. We try to work with them to produce the feature set and capabilities they want. The biggest source of dissatisfaction to me with DRM today is that consumers are never exposed to DRM itself. When you run into something that won't play on a device, you get this somewhat odd error message. You're not sure what's happening, you're not sure what to do about it. We have to do a better job insulating consumers from DRM. The protection still needs to be there, but consumers shouldn't have to interact with it.

IDGNS: You believe it should be seamless?

Bach: I think it should. Now that's a goal. It's a high bar. It's a very high bar because every content provider has a different approach to how they think about it. But I think that is the direction we want to go.

We have a lot of devices that just play Windows Media DRM straight up, no problem. The Zune itself has a specific DRM to it because, like the iPod, it is a vertical ecosystem that we try to protect to make sure the consumer experience is great.

IDGNS: So you can play songs from the Zune on any other device?

Bach: Right, that's true. It's very much like the iPod. And the idea behind it is, you're trying to make this tradeoff that I talked about between complexity for the customer and flexibility. Today we haven't got the right balance there. We've optimized for the customer experience that when you buy a Zune song it plays, and it plays great, but you do want more flexibility ultimately, and we need to figure out a way to do that.

The challenge in DRM, longer term, is working with the content providers and saying, "Where do you want DRM to go?" Today, I think they've been more focused on protection, and I'm hopeful that in the future they'll think, "How do I drive additional revenue and sales? How do I use the way we protect our content as a way to drive more sales rather than less?" We're starting to see people take that attitude. You're starting to see content providers think more broadly. We just have to be smart about working with people to make that happen.

Copyright © 2007 IDG Communications, Inc.

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