Cable Firms In 'Driver's Seat'

Microsoft Chairman Bill Gates told cable operators Monday they're "in the driver's seat" as set-top box technologies enable more consumers to operate video, Internet and telephone service all through a single system.

Addressing executives at the National Cable Television Association convention, Gates said cable companies have the infrastructure in place and control of the content that will drive the growth of set-top box technology.

Microsoft will spend $2.6 billion in research and development this year, and at least that much each of the next few years, to develop what Gates called "natural interface" technology. Such systems will allow users of set-top boxes running on Microsoft's Windows CE seamless ability to check TV listings, buy things on the Internet, make telephone calls, play video games, and more.

"Instead of having small buttons on every device," said Gates, "you'll go to your TV and ask that certain things be done."

Gates said simplicity is the key to expanding the customer base for set-top box and Internet technology, citing the acceptance for his WebTV Internet access device. "WebTV users stay online twice as long as PC users," he said, adding that sales have soared 600 percent in the last year.

He also said the industry can show advertisers how to market target specific types of customers according to their tastes. "That'll make the value of cable advertising rise dramatically," Gates said.

Gates said most of the profits in the technological environment as time wears on "will go to cable."

Additionally, he urged cable operators to "continue to spend" on conversion to digital technology and other infrastructure upgrades.

In a question-and-answer session, Gates was asked if his increasing involvement in the TV industry will lead to more scrutiny from the Department of Justice, which is already investigating Microsoft on various antitrust charges.

"I'm not sure how you can get above 100 percent scrutiny," Gates replied.

By David Wilkerson