November 23, 2005 4:00 AM PST

Tech firms focus on TV

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Cisco, which is best known for making switches and routers that shuttle IP traffic around corporate networks and throughout the Internet, has made the boldest move so far with the planned acquisition of Scientific Atlanta, the second largest supplier of set-top boxes to cable companies in the United States.

Cisco only entered the consumer networking market in 2003 when it acquired Linksys, which makes low-cost wireless routers. The company hinted strongly at its video strategy earlier this year with the acquisition of a small Scandinavian company called Kiss Technology, which makes DVD and DVR players.

Then the other shoe dropped with the proposed Scientific-Atlanta deal. A company that can provide the home networking gear, the cable box and the DVR technology could prove a powerful combination.

Delivering content for TV over an IP network is going to be a significant element for cable and phone companies in the future.
--Erik Suppiger, networking sales specialist, Pacific Growth Equities

Cisco has long been the leader in building the underlying infrastructure--the pipes--that connect various pieces of a carrier's network. Through the Linksys division, it has also become a prominent player in the home networking market, connecting PCs and laptops in the home to the broadband network.

Scientific-Atlanta is also an infrastructure player, but for video networks. It provides gear that transmits the video feeds coming from satellites on a cable operator's network and feeds those transmissions into the set-top boxes that are connected to TVs.

With their forces joined, Scientific-Atlanta helps make Cisco a true end-to-end player when it comes to building the next generation of IP networks that will handle video. Cisco will be better able to help cable operators and phone companies build entire networks optimized for video, which is the most bandwidth-intensive and demanding application on a carrier's network.

Analysts believe the complimentary expertise of the two companies actually makes a very good fit.

"Delivering content for TV over an IP network is going to be a significant element for cable and phone companies in the future," said Erik Suppiger, a networking sales specialist for Pacific Growth Equities. "The Scientific-Atlanta acquisition will likely be a catalyst for convergence by pushing service providers toward faster change."

Meanwhile, Microsoft has made no secret it also is focusing on TV, though its efforts have sputtered off and on. In 1997, it acquired WebTV and later invested $1 billion in Comcast and $5 billion in AT&T.

The software giant has acknowledged that its early efforts in the TV market came too early and were too ambitious. Since then, Microsoft's vision has morphed from an ambitious attempt to bring PC-like functions to the TV to simply improving video delivery. These days, it's focused on developing software that goes into set-top boxes to enable DVR functionality and improve program menus.

But Microsoft hasn't stopped with set-top boxes. It also sells its Media Center operating system to allow users to display pictures, play music, watch videos or record television shows on their PCs.

As part of a recent update to its Media Center, Microsoft has added the capability to stream digital media--music, videos, photos television and movies--from Media Center PCs to any television via its new gaming console, the Xbox 360, thus bridging the gap between the PC and the TV.

And then there is Apple, which has been rumored to be working on a new home entertainment product focused on delivering video from the computer onto the TV. In typical Apple fashion, the company has been tight-lipped about its plans, but analysts like Lin believe Apple is pulling the pieces together to introduce a product as early the first quarter of 2006.

Some speculate that an early sign of Apple's intentions was the Mac Mini, introduced earlier this year. The low-cost computer came complete with special media playing software.

"The Mac Mini doesn't really have the power to be a true video product," said Lin. "But you can see this where Apple would like to go."

Another clue for Apple tea leaf readers is the release of its new video iPod and updates to its iTunes store, which will now sell TV episodes for $1.99. Apple also has a long history of developing software for movie editing.

"In some ways TV-centered products may seem like a separate industry for these companies and far from their areas of expertise," Lin said. "But the market is changing, and it will increasingly make more sense for them to be here."

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11 comments

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Networking within the home
until they take this into account, they will fail on QoS side of
delivery of content. it would be interesting to see one of these
companies partner with a structured wiring company to provide
a true end-to-end solution within the home.
Posted by Adam Lenio (11 comments )
Reply Link Flag
public or private networks
The internet allows for a true global audience, so it has to be seen how these players work around the network issues
Posted by alansegal (17 comments )
Reply Link Flag
Mac Mini and TV?
What's the connection between the Mac Mini and TV? I've seen it mentioned before, but it does not seem like an entertainment center device at all. I bought one, just for the novelty, and since I hadn't used a Mac in years.

It does not have integrated component video output, dolby digital output, video input of any kind, or a TV tuner. How could anyone think this is Apple's entry into the media center or DVR market?

Apple definitely knows how to make simple, integrated products. As a TV-to-PC device, the Mac Mini does not qualify.
Posted by just_some_guy (231 comments )
Reply Link Flag
Simple...
The connection is not one built by Apple, but rather the DIY crowd. A lot of people have turned their Mac minis into DVRs. They have also been turned into car computers and other things. It's all because the Mac mini is small enough and quiet enough to put almost anywhere!
Posted by ddesy (4336 comments )
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Time-to-Market is key.
A company that can provide the home networking gear, the cable box and the DVR technology could prove a powerful combination.

It is not necessary that one company be able to develop a single product that could provide such functionality. Time-to-market is key. All that is required is that a consumer device be created that can access the gear that currently is available (and installed).

Cisco, Microsoft and Apple are the large, Johnny-come-lately, players in the Convergence marketplace. They are struggling to catch-up with the leaner-and-meaner companies that have already introduced consumer electronics products that can do the things mentioned in this article: shuttling video around an in-home network, connecting to portable media players, watching TV and movies that are streamed over the Internet to your TV. (See <a class="jive-link-external" href="http://mybrightbox.com/ppdeagle" target="_newWindow">http://mybrightbox.com/ppdeagle</a> for example)

Joe Laszlo, the Jupiter Research analyst cited in this article, has it absolutely correct: edu-tainment content on the Internet is bypassing the PC and heading straight to the TV in the living room. See <a class="jive-link-external" href="http://my-video-blog.com" target="_newWindow">http://my-video-blog.com</a> for further details.
Posted by ppdeagle (12 comments )
Reply Link Flag
Interesting
That Brightbox appears to be an interesting solution, but it is odd that they try to push some pyramid-scheme marketing. They also have a horrible website, if you just want the product specs/features.

I think that another poster got it right when he said a company needs to provide an easy to use end-to-end solution. Home networking is a big part of that. Wireless networks are still less than optimal, with questionable reception and bandwidth that may be inadequate for HD video. People do want to be able to move videos and photos from their computers to their TVs.

Media Center PCs are an interesting solution, since you put the convergence device right in the living room (less need for the local network). The biggest problem is with tuners. The PC needs tuners with direct support for digital cable and satellite - Microsoft has reached a deal with cable companies already. Also, HDTV support is shoddy, but improving.
Posted by just_some_guy (231 comments )
Link Flag
sounds good, bout time
The convergence is starting
I got tv on the desk top now, those getting together and havin kids make sense

Feel me?
Posted by IKENY (8 comments )
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Message has been deleted.
Posted by IKENY (8 comments )
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Scientific-Atlanta
I can only hope that Cisco's purchase of Scientific-Atlanta will mean
that there is hope for their DVR.

Currently, using it is one of the worst experiences I have ever had.
They clearly have never hired a Usability expert to help them design
their user experience for their set-top boxes and DVRs.

It was so painful to use that I was forced to return it.
Posted by m.meister (278 comments )
Reply Link Flag
Focusing on satellite tv
Focusing on the satellite TV (Directv, Dishnetwork, expressvu and starchoice <a class="jive-link-external" href="http://www.highspeedsat.com/starchoice-tv.htm" target="_newWindow">http://www.highspeedsat.com/starchoice-tv.htm</a> as the cornerstone to a home entertainment strategy seems like a no-brainer for technology companies, considering nearly 99 percent of all households in America have a TV set, and most often more than one. On average, American households spend between three and seven hours per day watching television.
Posted by jordan357 (19 comments )
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