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MSFT Analyst’s Day: Bach: Zune; Gaming; IPTV

Robbie Bach’s presentation at Microsoft Analysts’ Day and a follow-up q-and-a session are as good an overview of the company’s digital entertainment strategy as we’re likely to get for some time; Bach, of course, is president, Entertainment & Devices. If you have a chance, read the transcript or watch the webcast for the full scope.
Zune: It’s no accident that Zune was announced last week just in time for the investor dog-and-pony show and Bach had a message for them: meeting or beating Apple is going to cost hundreds of millions and it’s not going to be quick. “If you want to think about the investment timeline for this, you have to think this is not a six-month initiative and somehow in six months we’re going to have captured the marketplace. This is something that’s going to be a three, four, five-year investment horizon. We have to look at it that way. We have to invest in it that way. We will start with one product this fall in the United States. We will expand next calendar year into broadening the product line, as well as broadening the geographies we cover.” Still, it won’t cost as much as Xbox to develop.
— Touchpoints for Zune include the kind of community developing around Xbox Live and MSN tools, discovery and sharing of all kinds of media, integration across Microsoft.
— PlaysForSure came up during q-and-a and Bach tried to allay concerns. (Might have done more on that score if he’d volunteered it.) “PlaysForSure continues as it is today. … We’re going to encourage people to continue working with PlaysForSure and the interfaces that interact with Media Player and all the technologies that are in the core platform of Windows, which is, in fact, what the Zune team will do as well.” He expects Zune and Plays
IPTV: Bach admits the upcoming IPTV deployments with AT&T, Deutsche Telekom and British Telecom are “critical.” He added, “We need to scale those and support them and build them.” He went into more detail during q-and-a.
Entertainment: “I think one of the interesting things in entertainment is we don’t probably get as much credit in this space as we should.” He notes the 2 million cable set-tops with Microsoft’s TV software, the IPTV trials and the sales of more than 14 million Media Center PCs along with Xbox Live.
Gaming: “… You can argue that we’re the largest gaming platform company in the world today. We think, on an average month, we have over 100 million people playing games on our platform, about 80 million playing games on the Windows platform, almost another 30 million playing on our casual game platforms — MSN Games and Messenger.” He expects to have 10 million Xbox 360 consoles in action by the end of 2006 and contends that Microsoft is in a good position re the upcoming Nintendo and Sony launches (described only as “our competitors.”) “We have those things behind us. We have the machine running well, and we think we can out-execute them this holiday.” But the next major phase can’t take place without Windows Vista, which Bach calls “critical to our gaming platform.”
Xbox Live: 34 million downloads, 3 million videos, 2 billion hours of online gaming. Bach says the number of Xbox Live subs can be doubled in the next year or so.
Massive: “I think the advertising market here done right is a meaningful market. It’s not something that’s going to happen literally overnight, but over the next 12 to 24 months, it’s going to become a meaningful revenue stream, not just to us, but to our publishing partners.”
— More from CNET.