When I first saw these games, I could never imagine I would be recommending this title mainly because I was disturbed that Microsoft put these obviously dated games on the market without touching them up. In Alphabet Playhouse, children can even do an activity in which they unscramble the letters of their own name. Each book builds on the one before it. Children tend to feel strongly about this title either one way or the other. There are plenty of songs and exercises to help discern auditory differences, as well as work with rhymes.
Children can also build words in a nice printable dictionary activity.
Interestingly, none of my 3 children care very much for this program, although several children I know enjoy it quite a bit. Perhaps it is because my kids tend to be visual learners and favor games that don't involve a lot of listening. The objective will be to find software that helps the reading process along, not to get your child to be the first one on the block to learn how to read. Rushing children or putting pressure on them will only have the opposite effect. This makes it important to choose a title that is not intimidating.