The 1999 movie, Pirates of Silicon Valley, tracks the exploits of Steve Jobs and Bill Gates, calling them pioneers of an industry that transformed the world.
In this story, the pioneer is Steve Pearlman. He faced rejection when he tried to get Apple to develop a digital set-top box that would bring digital entertainment and the Web to the TV. (This was before Jobs returned and reversed Apple's declining fortunes.) Pearlman left Apple and founded WebTV.
In 1997, Microsoft acquired WebTV as part of their strategy to make Windows the hub of the networked digital home. The acquisition was announced at NAB, along with the formation of the ill-fated DTV Team. Microsoft, Intel and Compaq planned to deploy tens of millions of computers capable of receiving DTV broadcasts.
The DTV Team soon learned that the real battle for control of the transition to digital is being fought between the cable industry and the consumer electronics industry, which has partnered with DBS services around the world to compete in the lucrative multichannel television business.
The primary objective in this battle is control of the digital set-top box — the gateway to hundreds of millions of existing TV receivers deployed worldwide.
Five years later, it is highly revealing to look at the number of U.S. homes captured by the various combatants in the DTV wars.
WebTV has less than 1 million subscribers. It offered too little too soon. Microsoft has incorporated the WebTV technology in its Microsoft TV initiatives, including the UltimateTV platform offered by DirecTV.
According to a recent FCC report, as of June 2001 Dish Networks and DirecTV had about 16 million subscribers; the growth rate is about 15 percent. According to the National Cable & Telecommunications Association, as of November 2001 there were 13.7 million digital cable subscribers; approximately 100,000 customers per month are upgrading to digital cable.
Meanwhile, according to the Consumer Electronics Association, as of December 2001 approximately 300,000 homes now have integrated DTV receivers or set-top boxes capable of receiving DTV broadcasts. The report does not mention that virtually all of these are HD-capable DBS receivers that also include an ATSC receiver.
Thus far, surfing the web via the TV has not appealed to the masses. But consumers are interacting with the TV via video game consoles, DVD movie players, the electronic program guides (EPG) that are common to multichannel digital TV services, and PVRs. And interactive TV features are beginning to take off in some areas of Europe.
Meanwhile, a variety of digital media devices are starting to proliferate via consumer electronics retailers, including digital still cameras, DV camcorders and MP3 audio players. The PC is becoming the hub for manipulating and personalizing digital media content. It often doubles as a stereo, a DVD movie player or even a TV (with an NTSC TV tuner card).
But the promise of millions of PC-DTV receivers never materialized. Microsoft failed to convince PC manufacturers to include the stuff needed to turn a PC into a DTV.
Two technologies are helping to blur the distinction between a TV and PC:
Cheap mass storage (hard disks and recordable optical media)
Wireless networking Hard disks are now big enough, fast enough and cheap enough to turn the promise of the PVR into a practical reality. Consumers — especially those who subscribe to digital cable or DBS — are beginning to understand the natural synergy between the PVR and the EPG. Local caching will soon provide a variety of information services on demand, via the TV or any other digital media appliance in the home. News, weather, sports and local directory services can be updated continuously.
The most important benefit to broadcasters is the bandwidth multiplier effect of local caching. Broadcasters could deliver pay-per-view movies to local cache during off-hours, and these movies could then be purchased and consumed on demand.
But broadcasters are sitting on the sidelines while the cable, DBS and consumer electronics industries are deploying millions of set-top boxes.
The other technology blurring the lines between the PC and digital TV set-top box is wireless networking. Several technologies are vying to become the wireless networking standards for the home. IEEE-802.11 is the early leader. Bluetooth, a standard championed by Intel, is beginning to see significant deployments, especially for low complexity hand-held devices like cell phones. Also known as WiFi, the current 802.11-1997 standard supports TCP/IP networking at 11 Mbits/s. The 802.11-a and -b standards will push the data rates up to between 20 Mbits/s and 50 Mbits/s.
Apple pioneered the WiFi technology with its Airport base stations and cards — every Mac now ships with a built-in antenna and slot for an Airport card.
Support for WiFi is growing rapidly in the PC world as well. Microsoft has provided native support for the standard in Windows XP, and WiFi was prominent in the plans of many consumer electronics companies exhibiting their latest gadgets at CES.
The digital networked home
Bill Gates, Steve Jobs and Steve Pearlman all took to the public stage on Jan. 7, 2002, to update their strategic plans to become the hub of your digital home.
Steve Jobs used the annual MacWorld show in San Francisco to introduce the successor to its trendsetting iMac all-in-one computers. The new iMac has a 15-inch flat panel display that floats above a hemispherical base on a stainless steel arm. Apple is positioning the new iMac as “the center of your digital lifestyle,” a digital hub that provides the tools to deal with the proliferation of digital devices seen at CES.
Jobs also announced the completion of the suite of digital hub applications that ship with the iMac, which allow users to manage CDs and MP3s or digital photography, plug in DV camcorders and edit video, or post images to a Web site. The iMac also comes with a DVD-R drive and an application for producing DVDs that can be played on any DVD player.
Jobs still believes that the path to controlling digital media in the home is via the computer, not the TV. But all the hooks are in place to deliver content to other devices connected to the home network.
Bill Gates delivered a CES keynote in which he revealed two new Microsoft technologies designed to bring Windows into the family room. Mira is a rather obvious application of wireless networking. A touch screen flat panel display connects to its host PC using WiFi. You can take the display anywhere in the home, continuing to work with the PC, and use it to control other devices connected to the home network. Gates also demonstrated Freestyle, a graphical user interface optimized for the TV. The demo featured a digital music application that one could navigate via the TV to select songs for playout through the TV.
Steve Pearlman used CES to introduce his new company — Moxi Digital — and announced technology partnerships with EchoStar Communications Corp., Macromedia, RealNetworks and NDS Group.
Moxi's main product will be the software that integrates the functionality of the Moxi Media Center and wireless pods that allow media to be shared with up to four TV sets in the home. The company will license the platform to companies like Echostar, who will build and deploy the set-top boxes and pods to subscribers.
The Moxi platform is based on a Linux OS kernel; Macromedia Flash will be used to develop the graphic user interface for the Media Center and remote pods. NDS is providing conditional access technology. In addition to support for MPEG-2 video decoding, the platform will also support Real Networks video coding technology, and theoretically, other software video codecs in the future. Wired and WiFi wireless networks can be used to share media with the remote pods.
Configurations will vary based on the requirements of each company that licenses the platform. Some features include a multi-tuner cable or satellite receiver with IEEE-1394 support and the ability to record over 60 hours of video, a built-in CD/DVD player and digital music jukebox and a cable/DSL modem and Internet gateway for access to the Web from any computer in the home, with a built-in firewall for security.
The relationship with Echostar, which recently announced plans to acquire DirecTV, is particularly noteworthy. As part of the plans to consolidate operations, Dish Networks and DirecTV have indicated that they plan to replace millions of set-top boxes, as the systems currently are incompatible with one another.
Craig Birkmaier is a technology consultant at Pcube Labs, and hosts and moderates the Open DTV Forum.
Eighth annual FCC report on competition in video markets:
National Cable & Telecommunications Association statistics:
Final 2001 DTV sales figures from CEA:
Moxi Digital — The Moxi Media Center: