Development of SPOT began as an incubation project led by Microsoft engineer, Bill Mitchell, and initiated by the Microsoft Research division. Mitchell would enlist the help of Larry Karr, president of SCA Data Systems, to develop the project. Karr had previously worked in the 1980s to develop technology for Atari that would distribute games in a manner distinct from the company's competitors; Karr proposed FM broadcasting subcarrier transmission as a method of distribution, technology which would also be used by Microsoft's SPOT. Microsoft Research and SCA Data Systems would ultimately develop the DirectBand subcarrier technology for SPOT. National Semiconductor would aid in the development of device chipsets, which would feature an ARM7 CPU and ROM, SRAM, and a 100 MHz RF receiver chip.
SPOT was unveiled by Bill Gates at the annual COMDEX computer exposition event in fall of 2002. Gates stated that "new devices and technologies will help bring about the next computing revolution" and demonstrated refrigerator magnets that displayed the current time and sports scores, and an alarm clock that could display a list of upcoming appointments, traffic updates, and weather forecasts.
The first devices to make use of SPOT were released in 2004 by Fossil and Suunto. Tissot would later introduce the first compatible watch to feature a touchscreen, and Swatch would release the first compatible watch, largely tailored towards younger consumers. As smartwatches were the first type of devices to make use of the technology, they became the de facto type of device that represented it.
Production of SPOT watches ceased in 2008. In 2009, Microsoft announced that it would discontinue the MSN Direct service at the beginning of 2012. The company stated that this decision was due to decreased demand for the service and because of the emergence of more efficient and popular forms of data distribution, such as Wi-Fi. The MSN Direct service continued to support existing SPOT devices until transmissions ceased on January 1, 2012.
SPOT extended functionality of traditional devices to include features not originally envisaged for them; a SPOT-powered coffeemaker, for example, would be able to display information such as weather forecasts on an electronic visual display. Smartwatches featured digital watch displays, referred to as Channels, that presented information in a manner that could be customized by a user—a user could also specify the default channel to be displayed; this feature was functionally analogous with a home screen commonly seen in mobile operating systems. Additional channels could be downloaded from a specialized website, and a Glance feature would allow a user to cycle through downloaded information.
Manufacturers could also add their own features to SPOT-based devices; as an example, a manufacturer could create its own smartwatch channel in order to distinguish its product from a competitor's product. Each SPOT-based device included a unique identification number used to enable secure authentication and encryption of DirectBand signals. Microsoft also reportedly considered an alarm function for SPOT-based smartwatches that would activate in the event of theft.
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