The adage of great oaks and little acorns springs to mind with news that the world's first commercial roll-out of interactive television via broadband set-top boxes launched yesterday in Portugal.

The co-operative venture between national cable-TV station TV Cabo, controlled by Portugal Telecom, and Microsoft was hailed by the latter’s chief executive Steve Ballmer, whose presence in Lisbon underlined the importance of the occasion.

Said Ballmer: “This is a landmark day for interactive television and a very big day for Microsoft. I'm very optimistic about the market for interactive television on a global basis. It is certainly critical to the company's strategy.”

No-one expects the infant medium to yield spectacular short-term results, least of all on Microsoft’s bottom line according to Merrill Lynch. Indeed, the software giant’s revenues have been hit of late by the steep decline in PC and software sales.

But many believe the market potential to be mouth-watering: By 2006, predicts London-based Ovum Consulting, the number of global households able to access interactive TV will number 357 million, producing a revenue stream of around $4.5 billion.

Microsoft has invested more than $15 billion in minority stakes in cable television operations around the world – among them America’s AT&T and Europe's largest cable TV network United Pan-Europe Communications – purportedly an altruistic act to encourage the roll-out of broadband internet.

But analysts, a breed not known for its naiveté, believes the massive investment is unlikely to hinder deployment of Microsoft's interactive WebTV software.

News source: Financial Times