One-Shot Video
While privately held VXtreme has only one product on the market, Web Theater, a streaming audio and video software, Pete Mountanos, president and CEO of the one-year old firm says Microsoft is buying VXtreme's proprietary technology, which speeds up the audio and video streaming process.
     This technology includes software that allows a user to shoot a video once, view it at any resolution and send it anywhere on the Internet at any bandwidth, saving time and money. Among the companies using VXtreme's technology are CNN Interactive, CNNfn, General Electric and Bloomberg.
     "While we don't have the number of sites that Real Audio and Real Video has," Mountanos says, "we have the [advanced] technology and the [advanced] intelligence. The software is very innovative technologically."
     Adds Bruce Spencer, editor of Inside the Internet and Inside Netscape Navigator, "VXtreme has one of the most popular products out there. If Microsoft thinks it's really good and can beef it up and make some changes to fit their format, then the payoff will be big, because Microsoft will have a chance to get a huge market share from it."

Puppeteer Pulling Strings?
Still, the deal has raised eyebrows among those in the industry, many of whom believe that the VXtreme and Progressive deals are part of Bill Gate's master plan to expand the market share of Microsoft's Active Streaming Format and make it an industry standard.
     "Gates is a puppeteer. The more companies he has his hand in, the more he controls the industry," says one analyst. "He's buying interests in all of the competing streaming companies. If you're compete against yourself, you can never lose and you always keep control. This is part of Microsoft's plan to eventually control the digital television market and rule the Internet."
     Both VXtreme and Progressive, along with closely held VIVO and VDOnet, two other streaming companies that have alliances with Microsoft, have announced that its software will be compatible with the ASF format, furthering this idea.
     "I think what we are seeing is an attempt on the part of Microsoft to control the consolidation of the audio and video streaming industry," says Peter Dougherty, president of closely held Duplexx Software, whose Nettoob products uses Microsoft and Progressive's products to streamline their software. "They've extended themselves into cable and WebTV. It's clear that they want to move the consolidation of this industry in their direction so that everything supports Microsoft's ASF platform."

Setting the Standard
Rich Tong, vice-president of marketing for Microsoft's personal and business system division, who would not confirm the sale price, doesn't necessarily agree. "I don't know if it provides control as much as it sets a standard for people to plug in to," he says. "Every server can read the software and it allows tools and clients to be using the same format."
     And with only two streaming companies not in Microsoft's fold—privately held Vosaic and Xing Technologies—how long will it be until Gates and company drops a few million to acquire them?
     "It's too early to speculate on that," says Microsoft's Tong. "We think that streaming media is a very important category for us and a big area of growth over the next three to four years."
     "We've had technical discussions with them, but nothing regarding financials," says Howard Gordon, president of Xing Technologies. "We're not planning to sell. Right now we're scratching our heads here wondering what Microsoft is trying to accomplish."