• Illustration: SPOT Watch Prototype

The first Smart Personal Objects Technology (SPOT) product, a wristwatch that will receive data over an FM-based network, was demonstrated by Chief Software Architect Bill Gates at the 2003 Consumer Electronics Show in January. By teaming up with the radio broadcast industry for the wireless network, Microsoft hopes to sell large volumes of inexpensive wireless data devices without involving the wireless phone industry. The network could also evolve into an important part of Microsoft's overall device strategy, providing a way for devices to continue receiving data when they are not in range of a two-way network, for instance.

What Is SPOT?

SPOT provides a way for low-power devices with inexpensive processors to receive text data over a low-bandwidth, one-way wireless network. Although demonstrations have involved a variety of different types of data, including news headlines, sports scores, and stock quotes, the first goal of SPOT will be to make the devices perform their primary function better. For example, the SPOT watches will synchronize themselves with atomic clocks run by agencies such as the U.S. Naval Observatory. Other demonstrated ideas for SPOT devices include alarm clocks and refrigerator magnets that could display information such as real-time traffic reports and weather information. Gates said that the devices will be able to receive software updates as well.

The devices will run an embedded operating system created by Microsoft Research—unusual for a Microsoft product, the technology for SPOT was generated almost entirely within the Research group, which continues to oversee the initiative. National Semiconductor will manufacture the chip sets, which will include an ARM7 CPU with a clock speed of 28Mhz.

SPOT devices will receive data via a technology called DirectBand, which is based on a new wide-area FM subcarrier network. (Subcarrier systems are used today by paging networks and to transmit text data from radio stations, such as call letters or a station handle, for display on a radio receiver.) Microsoft developed DirectBand with SCA Data Systems and is implementing the network with radio broadcast companies such as U.S. market leader Clear Channel Communications, Entercom Communications, Greater Media, and Rogers Communications. The network is expected to be available in more than 100 North American cities when the first devices launch in fall 2003.

Watchmakers Citizen, Fossil, and Suunto (which specializes in electronic sporting equipment, such as SCUBA diving computers that measure depth and time underwater) have agreed to manufacture SPOT-based watches. Pricing has not been finalized, but they are expected to cost between US$100 and US$300, and Microsoft is considering charging "on the order of $99 a year for a subscription" to the data service, according to Gates. No concrete plans for other SPOT-based devices have been announced.

Strategy: Big Numbers, Low Cost

Like TV set-top boxes and wireless phones—two other markets in which Microsoft has tried to compete—consumers buy hundreds of millions of simple electronic devices every year. If Microsoft can convince some of these consumers to pay a few extra dollars (or even cents) for SPOT functionality, then it could become a profitable business. As Gates explained, "If we get 5 percent or 10 percent of people who have watches, it's a huge, huge number."

Microsoft's costs will be fairly low as well—the chip sets will cost the company about US$10 per device, and the DirectBand network will use existing FM infrastructure provided by its broadcast partners. Although terms of the deals with these partners were not disclosed, a typical FM subcarrier lease for New York City costs about US$18,000 per month, according to ClearChannel.

More strategically, DirectBand provides a new way to transmit data over a wide area without relying on the entrenched carriers in the wireless phone industry, some of whom have been reluctant to work with Microsoft in the past. Although Microsoft has recently begun to have success promoting MSN Mobile and other services through carriers such as Verizon and T-Mobile, DirectBand could evolve into an important component of Microsoft's device strategy. For example, an 802.11-based computing device could use DirectBand to receive vital information even when the user was not in range of an 802.11 network.

More information about SPOT is available at www.microsoft.com/resources/spot/. For background on Microsoft Research, see "The Role of Microsoft Research" on page 25 of the June 2002 Update.