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Is Microsoft's interactive TV strategy about to turn into a pile of ashes? Noises coming out of AT&T yesterday suggested at the very least white-knuckle negotiations, following Microsoft's confession that it wouldn't have the software ready for October.

European cable giant United Pan-Europe Communications has already gone into a mega-sulk over the delay, and it's starting to look like the megabucks Microsoft has spent on leveraging its way into cable TV in the past year could miss the spot, thanks to a development deficit. Compare and contrast: the PC market is a tied market, already shipping Microsoft software, so if a new OS gets delayed, not many dead. But the TV companies, despite all evidence to the contrary (how many years have they been going to do this for?), have schedules to be met, and they have choice.

AT&T is now reportedly talking to Microsoft about the delay problems, but it seems likely trials of the software will be pushed back from this summer to next year, which in softwarespeak sounds like something that could turn into a fall 01 rollout.

But curiously, AT&T's difficulties are largely self-inflicted, and probably reversable. Rather more than a year ago, an MS-AT&T hugfest brought AT&T some nice MS money, and (coincidentally...) AT&T upped its order for Microsoft units to 10 million. That's significant in itself, as the reports are now saying Microsoft was to supply software for 7.5 million of AT&T's initial rollout of 10 million.

The original 10 million commitment was an increase on one of 5 million, which had been made by TCI before AT&T bought the network. So we've gone up, gone down, and we're looking set to go down again. But the thing is that AT&T needs a stack more than 10 million interactive boxes for its network - it's what comes after those ship that's therefore important.

And if Microsoft does end up missing the gig, remember that the original 5 million deal with TCI was a consolation for Bill Gates. Microsoft had made an offer to buy into TCI if TCI took the shilling, but Microsoft was rebuffed, and TCI climbed into bed with Sun, and committed to standardising on Java, instead. The Microsoft deal was small potatoes compared to this, but one might well muse on whatever happened to the Sun hugfest when AT&T took over... ®

Related story:
AT&T contract obliges MS to make its APIs public

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