“The broadband device puts the company's .NET strategy into your front room. “They'll sell it cheap, with the revenues coming from online services and profiling,” revealed one source.”
This hardware strategy makes the Justice department's moves to limit Microsoft's bully boy tactics with the PC manufacturers moot. If Microsoft can't dictate to the PC companies, it will try to put them out of business with a nearly free PC equivalent. Wow. Now that is aggressive. It is easy to see this device in 10-30 m US homes in five years, particularly if the device costs much less than equivalent PCs.
You do the math:
Old system: PC (~$1500) + Tivo (~$300) + Game Machine (~$200) = $2,000
Home station: $500 (my guess) + $20 to $40 a month in direct fees + $20 a month in profile revenue.
This kind of device, if bundled with an integrated DSL modem and wireless hub (another $300 in hardware under the old system), would force the baby bells into the Microsoft camp. Old guard PC companies wouldn't stand a chance.
Another angle for Microsoft is to bundle a satellite receiver into the device (~$200) and buy the Dish satellite network. The home theater market is a mess. Microsoft would face little serious opposition killing the players in that market. Sony wouldn't stand a chance.