JAN. 7 | In perhaps the most ambitious product introduction at this year's International Consumer Electronics Show, WebTV co-founder Steve Perlman this week will unveil a set-top box that promises to corral all home entertainment and Internet services into one device and jump-start slow-developing technologies such as video-on-demand and digital video recording.
Dubbed the Moxi Media Center, the device offers music and movies on demand, high-speed Internet access and interactive TV. The VCR-sized box also serves as a satellite or cable receiver, a DVD and CD player and a digital video recorder that stores up to 80 hours of programming. And most innovative to set-top box design, Moxi can be wirelessly networked to as many as four other TVs and/or personal computers in other places in the home via add-on nodes.
Working out of Palo Alto, Calif., and employing 117 Silicon Valley veterans, Perlman hopes his Moxi box will profit from the lessons he learned heading WebTV Inc., the company he sold to Microsoft for $425 million in 1997. According to Perlman, development of the WebTV service soon came to a halt because the software giant was interested only in making it a platform for its Windows CE operating system.
Flush with $67 million in investments from the likes of AOL Time Warner, Vulcan Ventures, Cisco Systems and EchoStar Communications, Perlman believes Moxi's business plan and partnerships are wired in such a way to deliver the mass-market adoption that has eluded WebTV and such DVRs as TiVo and ReplayTV.
Moxi will license its software technology to cable and satellite companies, which will establish their own deals with consumer electronics manufacturers to build the boxes. These cable and satellite operators will then lease out the boxes to their millions of subscribers. Moxi makes its money exclusively on software license fees as well as transaction participation related to the system's abundant e-commerce potential.
Key to Perlman's confidence in the venture is the partnership with EchoStar. Although lead investor AOL Time Warner isn't ready to announce any formal plans relative to Moxi, EchoStar is announcing the device jointly with Perlman's crew at their respective CES booths and news conferences this week. The companies expect to begin market trials of Moxi around the middle of the year.
With its DISH network, EchoStar has already managed to equip a huge number of homes with advanced, multifunction set-top boxes. In fact, the company has quietly become the nation's biggest DVR supplier, with 1 million of its 6 million customers expected to use a box that combines a satellite receiver with a Microsoft DVR/WebTV system by the middle of the year. According to Perlman, however, the real opportunity lies within EchoStar's acquisition of DirecTV, since the latter company's 10 million subscribers would all need new set-top boxes should the mega-merger gain government approval.
Indeed, EchoStar could soon need to replace as many as 16 million boxes, and Perlman believes he has one that's cheaper and delivers greater value than any other on the market. In the $400 range, Moxi's primary box is comparably priced to the satellite receivers EchoStar now uses. However, the real savings come with subscribers who need $400 boxes in more than one room. Currently, for those customers, EchoStar has to lease additional boxes. With Moxi, however, those additional needs would be met with $30 wireless nodes.