The search for the Holy Grail is on again, in earnest. Just as medieval crusaders searched for the fountain of their faith, 21st century media technologists are working up a fever for the Ultimate Box, that one set-top (or, in home theaters, the rack-top) into which they can plug the entertainment umbilicals of the American family. Not to mention the rest of the world.
This is a new cycle for tilting at the media windmill.
For the past five years, the focus has been on whether the traditional set-top providers could progress a few thousand serial numbers from a ?1000? limited unit to ?6000? and beyond. They're making do in the middle of that range right now, while tabulating the long line of content providers that could require multiples-more chip capacity.
The latest leader on the Grail trail is Moxi Digital, the Palo Alto, Calif.-based creation of Steve Perlman, the developer of WebTV. Moxi, whose backers and management have plenty of it, has set its sights on the grandest game yet: a home media console that includes a set-top box with PVR, an EPG, a CD jukebox and DVD. But that's not all. It's rigged to share pictures, sound and data with three other rooms in the house. Hopefully, those with 20-room mansions will be able to buy five units for the price of four.
The sharing angle means Moxi's marketing will speed up consumer awareness of home networking, a trend that would not be overdue, but exactly on time. Numerous media have long known how to penetrate a home's exterior walls, and even do interior decorating, but only with intricate wiring. Moxi said it has broken the code, in its splashy debut at the Consumer Electronics Show in Las Vegas two weeks ago. It ran right past TiVo, the PVR innovator that has finally decided to license its software instead of building its own, standalone hardware.
Moxi's challenge is to overcome operator inertia (having just one or two set-top suppliers they've known all their lives) and consumer reticence to have appliances with varied life spans in one chassis. The profile of an audio/videophile is modular, with an aversion to appliance downtime. Moore's Law has made it so. The early adopters are the logical first market for home networks, but Moxi may score more points with the lower-priced mass market that likes the economics of combo units.
TV sets with built-in cartridge players, launched more than 30 years ago, died as quick a death as the eight tracks on which they ran; TVs with built-in VCRs never made it to the leading edge, but they keep selling at Target and Wal-Mart. Trip Hawkins's 3DO vision, a 1993 breakthrough combining advanced-resolution videogames on CD-ROM with CD music, never contended for the market share that went to standalones Sega, Nintendo and Sony. And Time Warner's 1994 experiment in Orlando with interactive TV turned out to be ten years too soon.
Moxi already has a deal with EchoStar which, if all goes well for the DBS operator, could open up millions of homes. Its success in that venue might not open a lot of cable doors, but AOL Time Warner happens to be one of its investors. And, if it has real answers in appliance integration and in-house media sharing, it could license other manufacturers as well.
One thing is certain: The time is ripe for all swords drawn in this new crusade. Cable operators know they have a window of opportunity while their DBS competitors work through state and federal examination of their proposed merger, financing and simultaneous integration and advancement of technology. MSOs are beginning to leverage their own, new digital footprint, with sequential deployment ? over the next several years ? of high-speed data, VOD/SVOD, PVR, ITV, HDTV, branded home media portal screens, electronic gateways and networks, videogames, videoconferencing and telephony.
Moxi in the market makes everyone focus on it that much more.
Analyst Paul Kagan is an active investor and money manager and often owns securities mentioned in his columns. He may buy or sell before and after the columns are published, and his positions may change at any time. Kagan owns shares in AOL Time Warner. Information in his columns does not represent a recommendation to buy or sell securities, nor is it a solicitation of any securities transaction. Kagan is vice chairman of Primedia Ventures, an affiliate of the owner of Cable World.
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