The War For Your Living Room — Microsoft’s (Secret) Strategy

The battle for your living room is heating up. And the software giant Microsoft is doubling down on its efforts to own your heart, mind, eyes, and ears in the living room. And from what I’ve seen, Microsoft’s own-your-living-room strategy combines the powers of one device, one patent and one new initiative.

Microsoft’s Trojan Horse Device: The Xbox

Released in 2005, the Xbox has successfully expanded its significance by constantly reinventing the experience through smart and consistent software updates. Just seven years after its launch, over half of the time spent on the Xbox 360 is with non-gaming applications.

With 68.3 million Xboxes in the marketplace, Microsoft is uniquely positioned to have a head start in the Smart TV ecosystem wars. A recent report from the NPD Group indicates that Smart TV shipments have increased 15 percent globally this year and that a significant portion of all new televisions shipped in countries like Japan (55%) and China (26%) are Smart TVs. While the US hovers closer to 20 percent, it is due in large part to US consumers leveraging connected devices like Microsoft’s Xbox and independent Roku to bridge the smart technology gap.

Microsoft’s Milvian Bridge: A Patent for Fully Integrated DVR

But it doesn’t stop with the Xbox. Based on a patent issued to Microsoft, I am concluding that Microsoft’s “next edition” device will have a fully integrated DVR. What’s more, their recent partnerships with cable operators such as Comcast and AT&T prove that they can build mutually beneficial relationships with cable providers while still allowing consumers to abandon their outdated cable boxes.

An integrated DVR offering would be highly desirable to cable operators as it helps keep consumers tied to their service. Microsoft would be able to partner with cable operators and allow them to lease future Xbox devices at no upfront cost as part of your ongoing monthly cable service fee. This relationship could be highly profitable for both operators and Microsoft as Xbox adoption skyrockets.

Microsoft’s Coup de Grâce: SmartGlass

And while a discussion of Smart TVs and DVRs is important, they represent only part of the equation. The future success of Smart TV platforms will in fact be determined by being part of a broader connected ecosystem. Android users will flock to Google TV as it evolves, Apple users will flock to the next generation Apple TV and Windows Phone users will flock to Microsoft.

While Xbox is a highly successful outpost for Microsoft, the Windows Phone just does not have the same volume of users. The biggest hurdle to consumer adoption? Its weak app ecosystem. But hope is not lost for Microsoft, thanks to their recent launch of Xbox’s SmartGlass

The SmartGlass platform allows (and encourages) users to connect their smart phones and tablets from Windows, Android and iOS to their Xbox. This second screen will not only significantly augment the Xbox experience, but will also augment their user base as users become increasingly intrigued with this clever innovation. Ironically opening the platform to other platforms will drive user adoption of Xbox which in turn might be a huge boon to Windows Mobile 8. If this isn’t part of Microsoft’s overall connected living room strategy – it should be. Microsoft desperately needs to open the app ecosystem on the Xbox 360. It’s robust user base could be the draw that the developers have been seeking to build top quality apps for Windows 8. Unlike its competitors Google and Apple, Microsoft needs to use the strength of its living room platform to win over the hearts of mobile users (and app developers) as opposed to the other way around.

Wars are won through smart strategies, smart technologies and smart partnerships. Microsoft is working to have all three as they leave the conquered office lands and approach the new living room frontier.

Originally posted on PSFK on November 11th, 2012.