Mike,
I think the risk is less with Gemstar than with Rambus. Part of my thinking has to do with my opinion that Gemstar's product is part enabling software and part applications software. Since there is no question in my mind that the product has crossed the chasm, it's not too early to invest if you believe as I do about the applications software. However, if you also believe as I do about the enabling sofware, now would be too early to be fully invested because the tornado hasn't started.
This is still the topic that I find to be the most interesting. Gemstar is deploying its IPG interface application in the forms of GuidePlus in the US and Canada and the G Guide in Taiwan and Japan at present. Others, such as MS & AOL have licensed the enabling IP and have already or are in the process of designing their own IPG interfaces such as with WebTV Plus, WebTV in Windows, DishPlayer, AOL TV and the MS IPG available from the WinCE platform. I am less familiar with the Deutsche Telekom, US West and Americast agreement details and do not know if they will deploy the IPG prepackaged, design their own or market some combination thereof.
The point is that Gemstar is not dependent upon licensees for product deployment. Conversely, those that wish to enter this market must license Gemstar IMO to enable a competitive state-of-the-art IPG.
This is without question a Gorilla market. The Manual instructs us to take a basket approach of the early leaders in an emerging industry. Gemstar and TV Guide are clearly the leaders. All negotiations between the two, historical and current, are for what share Gemstar will receive of the IPG revenues in the US cable market. This says something to me.
Cable IPGs are confined to those homes in the US that have a cable STB of which the are ~30 million leaving ~80 million households outside of their reach. Add to these numbers that less than 50% of the TVs within the cable STB households are actually STB attached.
Another developement which keeps me invested in Gemstar solely instead of a basket approach is that the major TV OEMs such as Sony, Philips, Zenith and so on have licensed and launched Gemstar's IPG. One would think that since Thomson gets a cut from the GuidePlus platform that the others would not be willing to put monies into a competitor's pockets. Surely someone would have licensed TV Guide and deploy it retail if this were a viable alternative.
Regards
Stew
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