NCI Beats Out Microsoft in TV Box Deal
By JONATHAN MARSHALL
c.1998 San Francisco Chronicle
After years of denouncing Microsoft,
Netscape and Oracle Corp. finally can boast a
big win against their Seattle nemesis: a key deal
by an affiliate to provide set-top box software to
England's top cable operator. Cable and
Wireless PLC, the world's third-largest
telecommunications company, is announcing
Tuesday its decision to license technology from
Network Computer Inc., based in Redwood
Shores, to operate a new generation of digital
TV boxes slated for deployment in England this
fall.
NCI, a privately held company, is owned
by Oracle, Netscape, Nintendo, Sega, Acer,
Sony and NEC.
Its software will give cable TV viewers a
way to select among dozens of pay-per-view
movie options, view program information off the
Internet, send and receive e-mail, shop at home
and use other interactive options.
Cable and Wireless will offer the boxes first to its 6 million
customers in the United Kingdom. But it also licensed rights to use the
software worldwide, including at its operations in Australia and Hong
Kong. The company reaches a total of 15 million cable households
internationally.
Termsof the deal wert disclosed, but in the near term it is worth
''millions and millions of dollars'' to NCI, said its CEO, David Roux.
''It is the most important contract of its kind ever signed. It has the
potential to be enormous as Cable and Wireless rolls it out to other
countries.''
NCI is engaged in a fierce marketing war with Microsoft for
software sales to U.S. and foreign cable and satellite system operators
who plan to deploy tens of millions of digital set-top boxes over the
next few years.
Cable and Wireless chose NCI's software over Microsoft's
because it is available today, said Ian Mecklenburgh, head of new
media initiatives for Cable and Wireless.
''We wanted to deploy this year and Microsoft doesn't have
anything yet,'' he said. ''We are fairly confident there is a real product
we are buying (from NCI), rather than the promise of some
development plans.''
Selling to one of the world's top cable operators is a huge coup
for NCI, said Roux. ''It validates our technology in a huge way,'' he
boasted. ''We went toe to toe against Microsoft, so it's a great win.''
Several weeks ago, NCI also won a deal to supply set-top
software to Bell Canada, a large cable TV operator in Canada. But
that deal hasn't yet been officially announced.
Another local interactive TV company, OpenTV in Palo Alto,
has won significant contracts with cable and satellite operators in
Denmark, France, Sweden and the UK, said OpenTV's director of
marketing, Jon Haass. But Mecklenburgh said Cable and Wireless
concluded that NCI's software is easier to develop new applications
with.
In the United States, the market for digital set-top boxes is still
in flux. Tele-Communications Inc. said in December that it plans to use
software from both Microsoft and Sun Microsystems, but the
announcement left plenty of room for NCI to win a place in TCI's
boxes, along with those of other cable operators.
''The U.S. market is wide open and will stay wide open for a
number of years,'' said Cynthia Brumfield, an analyst with Paul Kagan
and Associates.
But Brumfield said the Cable and Wireless deal gives NCI ''true
legitimacy'' in making its case to U.S. operators. ''The fact that it will
have the UK as a proving ground is only to its benefit.''
Shawn Kaldor, an analyst with International Data Corp., called
the deal a ''big win'' for NCI. ''They've always had a decent product,
but now they get some momentum,'' he said.
It has 160 employees. Besides the set-top box business, it also
writes software for network computers used in businesses and for
WebTV-type boxes sold under the RCA label by Thomson
Consumer Electronics.
Analysts estimate that the RCA box sold more than 40,000 units
after its introduction in late 1997, exceeding the manufacturer's
expectations.
NCI's director of marketing, Dave Limp, wouldn't say if the
company is profitable yet. But he did say ''NCI is not bleeding cash.
We aren't taking funds from Oracle. We are working from the cash
flow we have. We've never been healthier in terms of sales backlog or
revenue coming in.''
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