The buzz this year is over living room networks

By May Wong AP Technology Writer
Monday January 07, 2002

LAS VEGAS – Amid the latest in high-tech – from wearable gadgetry to automobile accoutrements – the loudest buzz at the 2002 International Consumer Electronics Show will likely center on entertainment devices for the living room. 

At the show that opens Tuesday, hardware makers plan to unveil DVD players that double as digital music or photo storage centers. New entries are also expected among a small but fast-growing crop of networked devices that are designed to play MP3s and Internet radio as well as host personal music collections. 

Analysts think one product in particular will stand out because it appears to deliver the best yet in digital convergence – the ability to integrate digital audio, video, television and computer data in a single device. 

The Moxi Media Center is a souped-up digital media server with an 80-gigabyte hard drive. It can deliver to as many as four televisions video recorded from a TV signal and video or audio stored on the hard drive or from a built-in DVD/CD player. 

It supports interactive TV, instant messaging and e-mail. 

Not only does this set-top box hook up to multiple televisions via extension boxes connected via wireless or Ethernet networks, it can also feed computers. 

In secret development for two years, the product comes from a company founded by WebTV entrepreneur Steve Perlman. 

“It takes all the digital media and brings it not only to your PC but also your TV and audio system,” said Perlman. His Palo Alto, Calif.-based company is also announcing a name change, to Moxi Digital Inc. from Rearden Steel Technologies. 

The media center’s built-in software is designed to work with cable or satellite TV, and later versions will also support digital photo and video management, the company said. 

A user in one room could watch a television program – live or recorded – while someone in another room could watch the same program but also be able to pause it or otherwise control the video recorder. At the same time, yet another person in the house could use the media center to listen to music files. 

Josh Bernoff, an analyst with Forrester Research, thinks the Moxi threatens not just major consumer electronic companies but also software providers and makers of current digital video recorders. 

“This is a real disruptive technology,” he said. 

Moxi’s business strategy differs from those of rivals that are struggling to become profitable. The company has no plans to manufacture the hardware, which some providers of interactive TV or digital video recorders have found to be a rough, often money-losing venture. Instead, it plans to license the technology to cable and satellite TV operators, which in turn can choose their own hardware and software partners. 

Moxi uses the open-source Linux operating system, meaning other companies can easily change software layers or build new applications on top of the platform. The company says its technology allows cable operators to reduce their average manufacturing cost of digital set-top boxes from $570 per TV to $425 for a single-TV household and $250 to equip a second TV. 

The company has a powerful, wide range of investors, including cable media giant AOL Time Warner, satellite TV provider Echostar Communications, and networking equipment giant Cisco Systems. 

Echostar, which is poised to merge with its larger rival DirecTV, was to announce at CES its plans to use Moxi’s technology. 

“The innovation coming out of this Moxi company is really a generation beyond what other companies are doing,” Bernoff said. “If it works, they’ll own the world.” 

Analysts say Moxi’s technology, open-ended platform and licensing model could help lead the way to the next generation of personalized television – a world of movies on demand in which programs and advertisements could be tailored to household tastes. 

But Moxi is not alone. 

The race to successfully converge the television with the personal computer, VCR or DVD player and stereo is crowded with companies vying for a piece of a very lucrative pie – 100 million television-viewing households in the United States alone. 

Companies like TiVo Inc. have pioneered personal video recorder technology, which allows viewers to pause live TV and record shows onto a hard disk, giving viewers more control of what they watch and when. 

Cable and satellite TV companies and their set-top manufacturers are already offering advanced boxes that incorporate home networking, personal video recording and interactive TV features. 

“It’ll be a squeeze in an already very confusing and squeezed marketplace,” Richard Doherty, president of The Envisioneering Group, said of Moxi. “But there’s nothing else on the drawing board that even comes close.” 

Although Moxi appears to have a head start over others, Perlman knows from his WebTV days that success is not guaranteed. 

WebTV, now part of Microsoft’s TV division, only has about 1 million subscribers after more than four years on the market. 

The greatest unknown is how consumers, still warming to the potential of digital entertainment, will receive the technology. 

“The world isn’t really ready for this,” said Bernoff. “But in 2002, we’ll see the world getting itself ready for this kind of product.”