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Glad you liked it. More IBD stuff, might be irrelevant because of GI news, which was weird:
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The cable TV set-top box may go from lowly appliance to home information hub if several technology companies have their way.
Thousands of new digital cable boxes are likely to land on televisions later this year. Besides changing channels and decoding cable signals, these flashy boxes promise Internet surfing, online shopping, home banking and video on demand. And all these functions would come with the click of a remote control.
''We are going to see a different cable industry than we know today,'' said Cynthia Brumfield, analyst at market researcher Paul Kagan Associates Inc. in Carmel, Calif.
The set-top box is the latest twist in the technology industry's ongoing struggle to drive computers and the Internet into U.S. homes. Companies have tried a number of answers: brightly colored machines, deep discounts on PCs, and even promoting the idea of a networked home, complete with a large central computer running numerous household electronics.
Software giant Microsoft Corp. has branded its WebTV Networks Inc. as a potential magic bullet. WebTV is a $200 device that brings the Internet to televisions via phone lines.
But cable already is in 70% of U.S. homes. And Paul Kagan estimates more than 11 million U.S. homes will have digital set-top boxes in '02.
So a host of computer, cable and consumer electronics titans want in on the action. Among them is Microsoft, which is competing with Sun Microsystems Inc. to provide software for running the set-top boxes.
Also in the game is Intel Corp., which sees its chips powering them. Sony Corp. is eyeing a possible new consumer gadget. And cable-box mainstays Scientific-Atlanta Inc. and General Instrument Corp. are staking out their place in the new era.
But how the transition would unfold is unclear. First of all, cable companies would have to rewire homes to provide for two-way communications. Some work already is done, but the bulk of it could take years.
Ultimately, analysts believe cable boxes could end up as retail consumer items. But digital boxes may not work on every cable system. To overcome differences, cable companies are looking at spending millions on new gear, says Josh Bernoff of Cambridge, Mass.-based Forrester Research Inc.
''That would require an unprecedented amount of cooperation and investment,'' Bernoff said. ''It's a long-term play.''
Big agreements are in the works. In January, Mountain View, Calif.-based Sun and Microsoft signed on to put their software in boxes for cable giant Tele-Communications Inc.
Meanwhile, Norcross, Ga.-based Scientific-Atlanta is providing first- generation digital boxes and gear to nine U.S. and Canadian cable operators. Its main rival, General Instrument of Chicago, is supplying boxes to another nine U.S. cable companies.
Scientific-Atlanta and General Instrument now provide most analog set-top boxes and are familiar with complex cable industry standards, says Tim Savageaux, an analyst with BancAmerica Robertson Stephens in San Francisco.
''By and large, it remains their market to have,'' Savageaux said.
Scientific-Atlanta has shipped about 700,000 digital boxes to cable companies, Savageaux says. General Instrument likely will ship 500,000 this year, he says.
It may take a while before cable companies send them to customers. But some 500,000 U.S. homes could have digital boxes this year, according to Paul Kagan. Next year, the number of U.S. digital-box homes is set to surge more than fivefold to 2.7 million.
''1999 will be the real beefy year,'' Savageaux said. ''Investors looking to get ahead of the curve will get involved this year.''
Consumer acceptance of digital boxes isn't a given. Cost is a key factor, analysts say.
Analog set- top boxes today come with cable service and cost about $100. A rental fee often is included in cable bills paid by all subscribers. More-powerful digital boxes, which are more computers than decoders, could cost as much as $400.
''Consumers will be paying more for cable's convergence to digital,'' Paul Kagan's Brumfield said.
Cable companies may offer digital boxes as a premium item to subscribers who'll pay extra for them. Or they could rent them as they do now with analog boxes.
Still, with the higher cost of digital boxes, that might not be feasible for indebted cable companies, says Forrester's Bernoff.
''Cable companies can't just stick digital boxes into everybody's home and make it up in a couple of years,'' he said.
Companies like Sony in Japan and the Netherlands' Philips Electronics NV might prove better at making easy- to-use, affordable boxes, he says. More so than Scientific-Atlanta and General Instrument, they are familiar consumer names.
The prospect of buying a digital box at a consumer electronics store is probably five years out, analysts say. Whether consumers will pay for the added features of digital boxes is unknown.
The computer industry's bid to fuse its products with digital boxes faces its own challenges, analysts say. Computer companies don't have a history of product simplicity and affordability, opening the door for rivals, some of them unknowns.
Microsoft wants its software to dominate digital boxes like it does now with computers. Rival Sun sees its fledgling Java software as ripe for the new boxes.
But Cupertino, Calif.-based PowerTV Inc., a Scientific-Atlanta unit, already has a leg up. Nine cable companies aligned with Scientific-Atlanta, including Time Warner Inc., are using PowerTV's operating system software.
Likewise, chip giant Intel faces competitors in its bid to supply chips for digital boxes, analysts say. They include Texas Instruments Inc., LSI Logic Corp., VLSI Technology Inc. and Hitachi Ltd. Unlike Intel, they have track records in consumer electronics.
''A consumer doesn't care if there's Intel inside a cable box,'' Bernoff said. ''This is about cheap chips and skinny operating systems.''
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Shane. |
