Like many American companies, Microsoft turns to international markets when the home front is either sewn up--as is so often the case with the company's software products--or when it needs a financial victory or a confidence booster in an emerging market the company has difficulty entering. In an example of the latter case, Microsoft has tried to enter the cable market, but the US cable industry has routinely shut down the company's attempts--despite the fact that the company tried to influence cable giants with financial investments (beginning in 1997) or woo them with an increasing range of software for cable TV set-top boxes. Until recently, Microsoft's only major cable successes have come in relatively small international markets, although one might argue that such markets are emerging with huge growth possibilities going forward. During the past week, Microsoft revealed that it's striking multiple deals with Latin American cable operators, giving its cable wares a large potential audience.
In Mexico, Cablevision Mexico, Cablevision Monterrey, and Megacable will soon deploy Microsoft's Interactive Program Guide (IPG); PCTV, a Mexican cable provider, will also roll out a more advanced set-top box that includes Microsoft TV Foundation Edition software for Web access, email, Instant Messaging (IM), and other Internet-based features. The company first discussed its Latin American technology trial wins last week, when Senior Vice President Robert J. Bach told analysts at the 2003 Microsoft Financial Analyst Meeting that the company is quietly making a lot of progress.
"In \[fiscal\] 2003 ... we signed nine \[cable\] deals, five in Latin America and four in the United States, including a deal with Comcast and Time Warner, for trials and, hopefully, ultimately, rollouts of that technology," Bach said. "So that's a big step forward for us in making progress in this marketplace. We've already deployed, in Latin America, 70,000 units of the programming guide, and I think you'll see more of that in the coming year ... We're making progress and working with network operators in a positive way." Microsoft chief financial officer (CFO) John Connors, also addressing the analysts, said that the company will continue to make a large number of public investments in the cable and satellite industries, although cable will continue to be the single biggest stake by far.
Whether Microsoft can turn these small international wins into case studies that will win over large American and European cable operators is unclear. Most cable companies appear willing to let Microsoft compete for a spot in the set-top-box market, but they aren't eager to simply hand the market over to Microsoft and give the company a monopoly similar to the one it enjoys in the PC industry. But as anyone who has watched the company for any length of time knows, Microsoft doesn't give up easily. And unlike most tech companies these days, the company can afford to float a lot of financial losers until the products become successful. Ultimately, this tenacity could give Microsoft the victories it needs to be a major player in the cable market.
