Microsoft and Comcast have announced that they are undertaking the first U.S. commercial deployment of Microsoft TV Foundation Edition, a digital cable software platform. Comcast will roll this out on November 15 in the state of Washington, mostly in and around Seattle. The platform will serve nearly a million customers, and would include many advanced digital cable offerings including VOD, DVRs and HDTV. “They have been banging on the doors for about 10 years,” Forrester analyst Josh Bernoff told Reuters, “This is a million people (being tested), they are not fooling around. Microsoft is aiming to replace Gemstar-TV Guide International Inc.’s software that runs in many of Comcast’s set-top boxes built by Motorola Inc. set-top boxes, Reuters adds.

Greg Gorbatenko, analyst with Marquis Investment Research thinks that the deal “is a way to integrate the computer with the TV via the set-top box and maybe some bluetooth/Wifi. This is a bigger deal for MSFT then CMCSA.” On paper, it might sound as a big deal, but it is not. Ever since Microsoft invested a billion dollars in Comcast, it has been lusting to get its payback. And this is it. Sources have told me that despite all the noise Microsoft is making, The Barons of Redmond are a long way from being the standard on Comcast’s US network. The software and all the platforms are still work in progress. “We’re quite committed to working to see if Microsoft’s product can really evolve to become the best navigation system working with Comcast,” Comcast CEO Brian Roberts told the Seattle Times. Read between the lines, it is called hedging. Microsoft has been locked out of the living room, and is left picking up the scraps from the desktop market. It is still trying to diversify into the living room, and is using its massive cash hoard to buy its way in. Like its erstwhile partner in crime Intel is trying to buy its way into WiMAX market. All the big moves aside, I still think Microsoft will have a tough time in the den, much like every other market it has tried to muscle into apart from the desktop.