On its earnings call last Friday, audio technology company Dolby announced that the next version of Microsoft Windows might not included its technology.
Its stock dropped about 18% on the news.
Microsoft has shipped Dolby technology for playing surround sound DVDs in Windows since 2007. According to Dolby's 2010 financial statements (PDF here), last year Windows licensing made up 12% of the company's revenue, up from 10% in 2008 and 2009.
So why strip Dolby surround sound support out of Windows 8?
Related story
Microsoft had no comment, but it's probably because Microsoft has found that pushing the PC as a home entertainment device didn't help Windows sales. If PC makers want to make high-end computers that connect to surround-sound audio systems, that's fine -- let them license Dolby's technology directly.
Instead, the Xbox 360 and Kinect now form the wedge of Microsoft's living room strategy, while Windows 8 is focused on tablet computing -- particularly keeping the iPad out of big businesses.
This doesn't look like good news for Windows Media Center, the remote-controllable home entertainment system that Microsoft has built into Windows since Vista. So far, Microsoft hasn't said anything about Media Center in Windows 8.
It's possible that Media Center will be revamped to focus on video over the Internet, with less emphasis on playing back DVDs. But it could also be cut from Windows 8 entirely. Enthusiasts would be upset, but most Windows users probably wouldn't even notice it was gone.
