There's a battle brewing for control of your television set.
Cable companies are preparing next-generation devices that will make your TV more like a computer. As the innocuous cable boxes on top of your television morph into a PC-like entity, companies such as Microsoft, Oracle's NCI, Diba, and cable set-top box makers will be vying to place software inside which will control these new devices.
Typical set-top boxes issued by cable companies today allow subscribers to view numerous channels and pay-per-view programming, but not much else. There are 65 million households with these boxes, most of which are due to be upgraded to next-generation digital set-top boxes. So what will the new boxes do?
Some digital boxes are already being produced, but they basically just offer cable companies the ability to deliver more channels and limited interactive functions.
By next year, however, newer digital set-top boxes with two-way cable modems are expected to bring new capabilities to the television. General Instrument (GIC) and Scientific-Atlanta (SFA) are the two largest set-top box and cable network equipment providers in the United States and figure to play a prominent role in what these new devices will do.
"The next-generation [devices] will offer photo-realistic graphics, session-oriented games, and the ability to do file transfers. You need some sort of operating system, and the way [our] platform is designed, it will support what's coming out there," says Dick Badler, vice president of communications for General Instrument.
Scientific-Atlanta has a similar vision. "I think you are going to see Webcasting, Web browsers, email and chat, and true video on demand available with this sort of platform," says Allan Ecker, chief technical officer for the company.
To allow these functions, ever-sophisticated operating
systems will be needed to run increasingly complex hardware.
Scientific-Atlanta, for instance, says it is working on a set-top box that uses a MicroSparc 32-bit RISC processor and a separate graphics accelerator chip, as well as its own PowerTV operating system.
Microsoft thinks that its Windows CE operating system is the platform that can control sophisticated hardware and provide a platform for third-party programs. The company has been meeting with cable executives to push a reference platform design that will incorporate Windows CE and technologies from WebTV, which Microsoft recently acquired.
But the company is an outsider facing competition from a number of other specialized operating systems and is no shoo-in to dominate set-top boxes the way it has desktop computers. In addition to NCI, Diba, and
Scientific-Atlanta, others with designs on this market include Microware, Toshiba and Acorn.
Cynthia Brumfield, a senior analyst with Paul Kagan & Associates, says that, with all the competition, the cable companies could move forward with their own designs if it costs too much to use Windows CE.
As the enthusiastic reception of today's IPO of @Home (ATH) shows, a lot of investors on Wall Street are betting that consumers want interactive services and high-speed Internet access delivered on their television sets. Industry analysts agree. (See related story)
"By the year 2002, about 43 percent of all cable systems will be capable of offering Internet services via a digital set-top box," Brumfield says.
Microsoft's $1 billion investment in Comcast has generated a lot of attention to the cable industry in general. And now with their push to put Windows CE into a high-growth platform, the computer and cable industries are beginning to jockey for position to control television.
"This shows how valuable that space on top of the television is," General Instrument's Badler says.