Microsoft has scored a victory in its battle to lead the convergence of TV and the Internet by winning a contract to supply cable giant Tele-Communications Inc. with software for its advanced set-top boxes.

The deal comes a day after Microsoft's rival, Sun Microsystems Inc., said TCI would use its Java programming language in the boxes.

These will supply services such as home shopping, banking and high-speed Internet access.

But TCI chairman John Malone made clear that Microsoft's Windows CE operating system would be included in each of up to 11.9 million boxes it plans to produce, while Sun's technology would be used only if economically viable.

"We chose Microsoft because they were the furthest along in terms of convergence between the Internet and the TV set," said Mr Malone. "This is the horse on which we're going to put our money."

"WebTV clinched deal"

Financial terms were not disclosed, but one analyst estimated TCI, the largest US cable provider, would pay Microsoft a licensing fee of $25 (£15) per box to include a special version of Windows CE, the growing family of software for consumer electronics.

While TCI has only committed to buying software for five million units, Mr Malone said the cable giant plans to include Windows on all the 6.5 million to 11.9 million boxes it expects to buy for itself over the next three to five years.

Mr Malone said part of what set Microsoft apart was its WebTV technology, some of which will be included in the boxes. TCI hopes to start selling these to customers late this year.

WebTV, which Microsoft bought last year for $425m (£263m), supplies Internet service through the TV set to about 200,000 subscribers.

The TCI boxes will go further and include cable modems, giving users high-speed Internet access through their personal computers as well.
 

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