NCI, Time Warner in talks

Oracle partner Network Computer Incorporated is talking with Time Warner Cable about providing software for use in interactive TV set-top boxes, according to cable industry sources.

Oracle is also considering investing in Time Warner's Road Runner and US West's joint venture, MediaOne Express. In return, NCI software could be used in the digital set-top boxes that Time Warner is planning to distribute this year, sources familiar with the talks said.

At an industry event yesterday touting the company's commitment to the Java programming language, Oracle CEO Larry Ellison alluded to a coming deal with a cable company to incorporate NCI's technology.

NCI declined to comment. When Time Warner executives were asked if they were negotiating to use NCI software, they said that "we are talking to lots of people" but declined to elaborate further. Other industry heavyweights such as Microsoft and Sun have also been clamoring to get their software into the boxes that sit atop tens of millions of TV sets because these devices provide a valuable growth opportunity as demand in their core markets levels off.

"Cable is a strategic market for technology players," said Michael Harris, president of Kinetic Strategies, a cable industry research firm, referring to the push by a diverse group of computer and electronics companies to get their foot in the door of the cable market. These companies are vying to form strategic relationships with cable companies in anticipation of a day when these digital set-top boxes will one day be available in retail stores, Harris noted.

For its part, NCI is angling to get cable companies to use its DTV Navigator software, ever since its much-ballyhooed push into the corporate network computer market starting running aground about a year ago.

The company is promoting its software as an expedient platform for developing applications such as TV set-top program guides because it uses the standardized language of Web browsers--HTML and JavaScript--instead of a specialized operating system. This means that different TV set-top boxes can be used in different locales without rewriting the programs, saving time and development cost.

NCI may be well positioned for a deal since it has already been working with Scientific Atlanta to get its software into the vendor's TV set-top boxes. Scientific Atlanta is supplying 500,000 set-top boxes to Time Warner to release this year. Time Warner is also specifying the software that will be used in 500,000 set-tops it has on order from General Instrument.

There are also other signs that NCI is gaining momentum in the race to provide software for the cable industry.

In March, NCI inked a deal with Cable & Wireless, one of the largest cable companies in the world. The deal represented a big move by NCI into foreign markets and evidently has helped it gain credibility and momentum in the United States, where a number of cable companies apart from Time Warner have yet to choose software technology for planned interactive services.

But nothing is certain until the deal is signed, Harris said. "It's better to assume a deal is done when it's announced," he cautioned.

The cable industry is notorious for announcing that deals are in the works, only to have talks fall through. Harris expects that a deal, if completed, could be announced early next month at a cable industry trade show.