Microsoft Corp created a new division to focus on products that combine home entertainment and communications as the company tries to fuel growth by expanding beyond personal-computer software.
Microsoft's new eHome division will develop products that combine voice and messaging features with video, music and digital photos, said Mike Toutonghi, eHome vice president. He declined to give details of specific products or when they will be available.
The biggest software maker is trying to combat falling sales of PCs by entering new markets such as networked electronic devices for the home.
Microsoft, whose Web-enabled television service attracted fewer customers than expected, will face competition from consumer electronics makers and other software companies, analysts said.
"Consumer electronics is such a huge market that if they were successful it would help them maintain their growth percentage -- but they haven't demonstrated any skill in it," said Bob Alexander, president of Alexander & Associates, a New York-based market research firm.
The company announced the new division, which was created in February, at a speech on Monday at its Mountain View, California office.
Two weeks ago Microsoft rival AOL Time Warner Inc, the top Internet service, said it will work with Sony Corp, the second-largest consumer electronics maker, to develop networked e-mail, Internet and entertainment devices for the home.
Microsoft wants to link consumer electronics devices such as digital cameras and digital camcorders with personal computers to make them easier to use and manage, Toutonghi said.
"The consistent message we are hearing is that consumers now have access to a plethora of technologies," he said. "There's a very real risk that consumers will soon be in technology overload." Microsoft has a poor track record in products for the home, Alexander said. The company's WebTV service to bring Internet features to TV sets failed to garner more than a million subscribers and has been rolled into Microsoft's MSN Internet access business.
The company is now focusing on a service that emphasizes TV features such as recording two shows at once. It has declined to provide subscriber numbers.
Greg Durkin, vice president at Alexander & Associates, said that while Microsoft, AOL Time Warner and Sony's focus on this market may serve to encourage their investors, it's ``not monumental'' because consumers aren't interested in these products yet and probably won't be for at least a decade.
"People are battling over this theoretical future of home entertainment, but consumer behavior changes very slowly," said Durkin. "They are going for a niche market and hoping the behavior of the niche will translate into the mass market, and that's not going to happen in three years."
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