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Power to the server

As interactive and digital TV become more prevalent, a huge opportunity is emerging for server makers to power these new systems.

As cable companies and broadcasters begin deploying interactive and digital television, including video-on-demand services, an opportunity is emerging for server makers to supply the backbone for these burgeoning networks.

In short, just as "client" PCs are attached to servers in corporate America, so will TV set-top boxes and new-fangled home computing devices become clients hooked up to powerful server computers which supply video-on-demand, Internet, and a host of multimedia and information services.

Some cable providers and cable-based Internet services like @Home have some of the server infrastructure in place already. But most service providers providing interactive television will have to add to or completely furnish a backend network of servers, providing a new market opportunity for server vendors.

"Server and networking companies marketed first to Information Services managers [who make computer purchasing decisions], and next to telephones and ISPs as those companies have moved into digital data delivery business," said Mark Kirstein, an analyst at In-Stat.

"Now where they're headed to cable and terrestrial broadcast businesses, where that data is digital."

High end, high-profit server computers in this market segment are a bright spot in the future for vendors such as Compaq, IBM, Dell, and SGI, analysts say, especially as the PC industry tries to balance the effects of low cost, low-profit consumer systems such as set-top boxes.

"In general, there is not a lot of money to be had out of There is not a lot of money to be had out of the set-top
boxes. the set-top boxes, because once deployed they stay there for 3-5 years," said Sean Kaldor, an analyst with market research firm IDC. "What everyone is looking for is to make money on the server side."

"It's a long-term investment at multiple levels of the market," Keirsten explained. "These are high margin, high dollar opportunities."

Scaleable servers that can handle video demands from thousands of subscribers are a potentially lucrative new business, but experts caution that the complicated and somewhat disorganized network of cable providers and broadcasters also provide a host of challenges for backend providers.

"The problem is that [cable giant] TCI is not just one operator--there are many [seperate operators], and it's a case-by-case process," Kaldor said. "What cable companies want to do is come up with an architecture and that's the end of it. They want to try not to have it be heterogeneous."

In addition to dealing with the complicated infrastructure already in place, vendors are also now providing services to television viewers, an audience much more used to reliable service than PC users or other traditional server clients.

"Oracle and SGI and other companies solved these reliability problems in terms of video streams long ago," said Sharat Israni, director of digital media services for Silicon Graphics. "Of course, a server is not as reliable as a videotape machine, but both through improving server technology and through [tying many servers together] you approximate the reliability of a redundant videotape machine, and it continues to improve."  

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