IBM is turning its attention to digital media, and that means cable operators will be seeing more of Big Blue, as the company pushes into video-on-demand.

The computer giant last week launched its Digital Media Factory suite of products and services aimed at providing an infrastructure to manage, store, protect and distribute digital video and audio ? a market IBM says research companies peg at $30 billion by 2004.

IBM developed some of the expertise it needed to launch its new Global Digital Media unit while working on a $20 million contract to digitize all of CNN's video archives, says Jurij Paraszczak, CTO of the unit.

?What's really happening is that the power of storage, the power of processors, is making it possible to do things on custom chips, on a standard processor,? Paraszczak says. ?This is going to drive a lot of changes in many industries, not the least of which is cable.?

But some analysts question whether IBM can make a go of digital media, at least in the cable television industry.

?IBM has a history of approaching sectors and then pulling back,? says Carl Lehmann, VP-electronic business strategy for research company Meta Group. He points to IBM's move into interactive television, which it dropped in favor of an Internet strategy after 1994.

?Now I think they've come full circle,? says Lehmann. ?This helps to sell lots of bits, lots of storage, but I can't see IBM making a full-court press in this space.?

But IBM says it has ? or will have ? a lot to offer cable, ranging from storage to customer care and billings systems. Although IBM sells chip sets to low-end set-top-box manufacturers in Europe and Asia, Paraszczak says the company doesn't expect to break into the U.S. set-top market any time soon.

Instead, the company, which has sold back-office computers to U.S. cable operators in the past, projects that VOD will eventually be its key cable-related service.

?We really believe that once video-on-demand becomes a popular service, there will be a lot of content to manage ? where is it, what is it doing, how does it perform?? he says. ?We'll be selling storage and content management in that space.?

Paraszczak acknowledges VOD is a crowded sector and says IBM doesn't expect to muscle out major competitors, but rather work with them on the back-end, which is the key to on-demand services. (Because today's low-end thin-client set-top boxes have little memory to spare, content must be stored on the network.)

Big Blue already works with VOD vendor Diva and can supply servers built on its x86 platform and deliver Linux-based equipment and services.

?We're not trying to supply the whole VOD system, just the storage,? he says. ?We're not trying to compete with Diva, we're trying to provide their infrastructure.? And his company would be happy to do the same for Seachange International, nCube or other companies in the VOD business, he says. IBM has already worked with other ITV companies, including middleware provider OpenTV, and is in discussions with Liberate, notes Paraszczak, who also serves as an executive member of the Advanced Television Standards Committee.

Cable operators are most concerned not with which vendor's technology is deployed but how much it costs, says Paraszczak, and in that regard IBM is working hard to please the industry.

The biggest cost ? and one of the factors slowing VOD deployment ? is the bandwidth demands, which IBM engineers feel gives them an entrée into the field.

?We do have a video server of our own, called VideoCharger, and we'll be working to prove we have the lowest cost per stream for the operator; right now that's the biggest issue for them,? he says. ?They don't care what it is, they don't care what color it is, they don't care what protocol it is. They want to know ?what's the cost per stream???

IBM has no current cable VOD deployments, but its technology is in trials, and cable operators will be approached soon.

But as much as IBM may want to make a play for cable operator cash in a recession, delivering VOD isn't easy, and many others already occupy the space, says Josh Bernoff, principal analyst for Forrester Research.

?Companies like Concurrent and nCube are pretty far along here,? he says. ?They're going to encounter some pretty stiff competition.?

IBM may play a role in the integration of the varied software demands in the new ITV industry, Bernoff notes, but even there, he's not sure Big Blue can compete.

?That's why OpenTV and Liberate exist,? he says. ?And there, it's a question of expertise. It's a long way from digitizing CNN's archives to doing VOD.?

But IBM's Paraszczak insists his company will be there with the most economical technology when cable operators are ready.

?If the cable operators are serious about deploying VOD, we're serious about providing the infrastructure and the services,? he says.

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