Sony's settop deal is a blow to GI. "Time shifting" maybe an option..................................
zdnet.com
Sony Nabs Set-Top Throne From GI
By Karen J. Bannan, Inter@ctive Week
September 17, 1999 10:17 AM ET
Cablevision, the sixth-largest cable operator, and Sony last night signed a $1 billion set-top deal that marks Sony's entry into the cable set-top marketplace. The consumer electronics manufacturer will provide the operator with 3 million advanced digital set-top boxes and replace General Instrument as its sole set-top supplier, officials said.
The deal, which comes on the heels of Motorola's acquisition of GI earlier in the week, could forever change the face of the set-top box market, analysts said.
"General Instrument's hammerlock on the set-top market is being slowly loosened up by changes in the cable industry ownership," said David Rader, a senior analyst at SRI Consulting. "This Cablevision deal is going to open up further opportunities for Sony and other [consumer electronics] manufacturers," he said.
Sony's deal with Cablevision is a direct response to the Motorola/GI deal, announced earlier in the week, one analyst said.
"Sony has a 4.7 stake in GI, which will become slightly diluted once the Motorola deal closes. Companies invest in companies so they feel that they have an influence on the product road map. After the Motorola acquisition, Sony will have no influence," said Richard Doherty, a director at the Envisioneering Group, a technology consultancy.
Sony will provide Motorola with stiff competition since, like Motorola, Sony already has an established retail brand. Set-top boxes will ship to the retail market next fall.
The deal also could have far-reaching effects on GI's current set-top deals with other cable operators, analysts said.
"GI made deals with other operators based on volume. Losing Cablevision as a customer will drop their volume and that means the company's overall costs are going to go up," said Envisioneering's Doherty.
Although Cablevision didn't have a current digital set-top agreement with GI, GI has been the operator's preferred provider in the past.
The 3 million new Sony boxes, which will begin to ship to Cablevision next summer, will feature Sony's i.Link IEEE-1394 digital interface, or firewire as it's often called, to allow consumers to connect the box with other consumer electronics; its Digital Transmission Content Protection (5C DTCP) technology; the Home Audio-Video interoperability-based home networking software; and the Aperios operating system. The technologies, along with other undisclosed software programs, will allow Cablevision to offer video-on-demand, interactive content guides, wired home networking, Web-enhanced television, e-mail and interactive games, said James L. Dolan, Cablevision's chief executive.
An optional hard drive that would enable time-shifted programming and the storage and download of additional content and applications is another possible option for the set-top boxes, said Mack Araki, a Sony spokesman. Scientific-Atlanta, the second-largest set-top box manufacturer today, also ships its boxes with an IDE disk drive connector.
Sony also will build its own conditional access card, which allows cable operators to protect its system from theft, however Araki would not discuss specifics about the cards.
The use of the 5C DTCP will let Cablevision limit the quality and types of programming that can be recorded and stored, something content producers have been asking for since high definition television was announced, one analyst said.
"Conditional access and copy protection are two different things. The 5C product is a smart copy protection technology that addresses the needs of today's programming," said Envisioneering's Doherty.
This is Sony's first cable set-top box deal, although the company is already manufacturing satellite and WebTV set-top boxes for the U.S. and international markets, said Sony's Araki.
The deal also gives Sony another outlet for its content and programming.
"For Sony, we see this as another critical step in our strategy to marry the power of our electronics and technology assets with our vast entertainment holdings to create a compelling 21st century lifestyle experience," said Howard Stringer, Sony's chairman and chief executive. |
