amelita wooziness: John Dvorak's Second Opinion: Microsoft may be poised to challenge Apple

By John C. Dvorak

BERKELEY, Calif. (MarketWatch) ? Right now, Microsoft Corp. seems poised to do something bold: go into the computer business to compete with Apple Inc.

This is possibly being done under the guise of its new emphasis on the Xbox360 and the upcoming Xbox720 which maybe be previewed later this year.

An article in the superb All About Microsoft blog by Mary Jo Foley titled, ?Is Xbox the new center of the Microsoft universe?? reveals some interesting changes at the company. It led me to this conclusion. Read blog post.

Her post stems from some interesting commentary by an employee who has shuttled back and forth between Microsoft /quotes/zigman/20493/quotes/nls/msft MSFT +0.05% ?and Google. It reveals the fact that Microsoft is quietly targeting the Xbox division as a primary focus. Microsoft may have finally realized that the Xbox can become more than a game console.

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When the Xbox360 was first shown, I recall seeing some demos of its media server capabilities. At the time though, to be fully implemented users had to have a special version of Windows XP called Windows XP Media Center Edition.

The problem was nobody ever heard of Windows XP Media Center Edition, and those who did hear of it never knew what it was for. The company never sent samples of the product to the media, that I know of, and never lectured anyone about its power.

The capabilities of the Media Center idea kept growing nonetheless and many casual users of the Xbox360 essentially are running an IPTV lashup through their TV sets after having installed Netflix on the Xbox360.

In essence, they are streaming TV shows through the Xbox from the Internet to the TV set.

Microsoft has done a very poor job of pushing the capabilities within the Xbox division. Instead it spins its wheels on the Windows Phone and Bing fearing an overall threat from Apple /quotes/zigman/68270/quotes/nls/aapl AAPL -0.55% ?and Google Inc. /quotes/zigman/93888/quotes/nls/goog GOOG -0.54% ?, respectively.

This may be changing if Microsoft can realize it has a market all to itself and a real competitor to Apple if it can make the Xbox720, or whatever it is called, a full blown computer that is also a game console. I?m thinking Xbox-PC.

The reason I suspect this is going on is that in January Microsoft moved operating system guru and genius David Cutler to the Xbox division. I didn?t see the significance of this when it happened. But now I do.

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Cutler was the designer behind the hottest Digital Equipment (DEC) operating systems when he was brought to Microsoft to design Windows 2000, considered by many to be Microsoft?s best OS, ever. Everything since then stems from Windows 2000.

At 70, you?d think the guy would retire or become a professor at UW as opposed to going to a division that makes a game console.

The tricky part will be how Microsoft executes a potentially new platform. Right now there is no evidence that they can pull off an original idea, if that?s what is indeed going on.

But if they can, then the industry can get exciting again. And I?ve always been convinced that Microsoft has always wanted to produce a branded desktop computer like Apple does with the Mac. This may be what we are about to see. The Xbox-PC.

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