May 7, 1999 4:00 PM PDT

Be plans set-top push

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Be Incorporated's plans to go public could bring another contender into the hot market for TV set-top box software.

At the same time, if Be's new course bears fruit, it could give Be-investor Intel a little more leeway into the burgeoning market.

The operating system software maker, which yesterday announced plans to go public, said in a regulatory filing that it plans to expand into the market for information appliances, including TV set-top boxes. The company hopes to raise $57.5 million.

The move would be a new direction for the maverick company, run by former Apple Computer executive Jean-Louis Gassee. Since Be's founding in 1990, it has focused on becoming a new operating system for computers, but with the emergence of Internet-enabled devices, Be has decided it wants a chunk of the market for Internet and cable TV devices, a rapidly developing arena that's not dominated by Microsoft.

Be's new strategy has its skeptics, though.

"Be will do anything to make themselves relevant," said a financial analyst who declined to be named. "They were supposed to be the Linux [of operating systems], but Linux overtook them. Now they are trying to be the convergence OS."

The set-top field already includes some formidable foes angling to get into next-generation digital set-top boxes, including Sun's Java OS for Consumers, a host of embedded operating systems from companies such as WindRiver, not to mention Microsoft's Windows CE. Microsoft's CE efforts got a huge boost yesterday with its $5 billion investment in AT&T.

Be, however, has friends in high places. It has both financial and technology backing from Intel, the world's largest chipmaker. Be's ties to Intel stem from a November 1998 investment in which Intel took a 10 percent stake in the company.

Intel executives have said the company planned to support the BeOS on its set-top box platform. Be also held a product demonstration at last September's Intel Developer Forum. The combination of Intel's manufacturing prowess and Be's vaunted multimedia-oriented software could help gain the attention of PC companies looking to enter the information appliance market.

Be would not comment on its plans, citing the "quiet period" that precedes public offerings.

Regardless of Intel's connection with Be, the chip giant has clearly positioned its StrongARM processors for the set-top market, said Scott Randall, an analyst with Soundview Technologies, although publicly, Intel is touting its Celeron chips as the engine of its set-top plans.

Earlier this week, Intel said upcoming StrongARMS, due out next year, would enable handheld computers, Net access devices (such as set-tops), and other devices to process data at up to 600 MHz using very little power, signaling its intention to compete.

Whichever chip takes hold, Intel simply wants to foster industry growth on the theory that whatever's good for the market is good for Intel, said US Bancorp Piper Jaffray Ashok Kumar.

"The way to look at Intel's perspective is that the set-top box appeals to Intel, but it's still not going to be its crown jewel," Kumar said.

News.com's Kurt Oeler contributed to this report.

 

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