Yes, Microsoft has announced its Freestyle trial trial in this market. But it has entered many, many markets without success. The most recent example is XBox, which is a failure by MSFT standards.
MSFT embedded systems is also pathetic.
The Window CE software is nicknamed "WinCE" for a reason.
Microsoft is embarrassed by its "wireless" intiative, which is behind the times and revolves around warmed-over versions of WinCE
Remember that even where MSFT succeeds (typically, for software close to the platform O/S), it often starts out very klugey.
Does anyone know if the Freestyle-beta test is wireless?
I think this foray by MSFT into the home server market is too late. Many, many companies are read to jump in. I suspect that by this fall we will see many products hit this market and that it will be a common XMAS present in 2003, although perhaps it would be 2004 before the prices drop enough to hit a sweet spot.
Long-term, if a company like JRiver succeeds in bundling its product with a home server product (as MM or Roxio succeeded in bundling with CD burners), I don't even see why you would need a DVD player or CD player in your living room or family room.
Toshiba is correct to jump into this market, albeit at a nosebleed price.