The New York Times (reg. req.) reports on the testimony of Mitchell E. Kertzman, CEO of Liberate Technologies — an interactive television (iTV) software platform developer, in the Microsoft anti-trust trial (Executive Fearful of Microsoft in Interactive TV Software). C|Net News carries a Reuters wirestory on the testimony (Liberate CEO testifies against Microsoft). Kertzman was testifying on behalf of the nine states that are pushing for stiffer sanctions against Microsoft. At issue is the fact that the current settlement would permit Microsoft to continue to use its monopoly power to stifle competition in the realm of interactive television software by, for example, purchasing elements of cable companies and forcing them to use Microsoft software. The EU actually stopped this from occuring when Microsoft invested in two European cable companies a couple of years ago. CRM News had the story back in April 2001 (Microsoft Bows to EU Cable TV Demands). Microsoft claims that iTV software is not the middleware the antitrust case is supposed to deal with. Kertzman's testimony was weakened by an email where he changed his previous pro-Microsoft breakup stance and offered to provide his changed opinion to journalists on behalf of Microsoft. The Register has more on this aspect of the story (MS accuses Liberate CEO of offering anti breakup deal).
In related news, WIRED carries an AP wirestory that reports that some attorneys think Microsoft's antitrust strategy is risky (Microsoft Rolls the Dice).
Regardless of Kertzman's ability to shift opinions quickly, the position the states are taking on this issue is correct. Convergence, the merging of television and computer, is taking place quite rapidly, but it is not taking place on PCs, it is happening in the settop box. He who controls the settop box is going to have a great deal to say about entertainment in the home. The settop box is just as (if not more) important than who controls the cable, the satellite or digital line that feed information into the home. Ultimately, cable, broadcast and satellite are mere pipes. The settop box will determine how money is made with these systems.
The settop box will become the center of virtually all home entertainment. The software that runs the settop box will also run the music jukebox (where all your ripped CDs or downloaded music will be stored), the DVD player, the Digital Video Recorder (think ReplayTV or Moxi Media Center) and video game machine (after all, how do you think Microsoft's XBox will evolve?). The settop box will also be a simplified computer, able to do a few things like email, word processing, personal finance and web surfing (this isn't webTV, there will likely be a separate monitor and keyboard for this functionality in the den, but connected to the settop box via cable or wireless 802.11b). For many households, this will be enough, there won't be a need for a personal computer.
This is why the testimony given by Kertzman yesterday is important. Although televisions and computers seem to belong to different realms, the difference is growing smaller quite rapidly. Any settlement agreement that doesn't recognize this and take it into account will be obsolete the minute it is signed.