Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: THURSDAY, July 8, 1993 TAG: 9307080090
SECTION: BUSINESS PAGE: B8 EDITION: METRO
SOURCE: Knight-Ridder/Tribune
DATELINE: LENGTH: Long
With personal computer profits slimming and the business market for computers saturated, nearly every major high-technology company is frantically searching for the next mother lode.
And their most eager gazes are fixed on the long-untapped home market, one in which Silicon Valley has scarcely made a dent despite a decade of huge success in computers.
Interactive TV could be the key that finally gets them in the door.
For the nation's major high-technology center, providing the key components for building a two-way television system is an invigorating prospect. Apple Computer Inc., Silicon Graphics Inc., Intel Corp., 3DO Co., Hewlett-Packard Co., Sun Microsystems Inc. and Kaleida Labs Inc. are just some of the well-known valley companies with a stake in a future business many think could dwarf anything the valley has seen before.
"This is a bigger market than they ever dreamed of with PCs," said Denise Caruso, editor of the Digital World newsletter.
It also is a business with a mountain of uncertainties.
Interactive TV, after all, is predicated on the assumption that people will spend even more time in front of their television sets - and be willing to dig far deeper into their pockets for the privilege.
Then there's the issue of regulation.
To top it off, there is bickering over who will control the system, and especially the programming transmitted on it. Entertainment, expected to be a primary driver of interactive TV, is produced by a huge and powerful industry with rules and traditions decades older than Silicon Valley's - and a disinclination to hand over power or money to high-tech newcomers.
"Somewhere between $500 and $1,000 per [per subscriber] will be spent to make cable television interactive," said James H. Clark, chairman of Silicon Graphics. "That says that $60 billion will be spent at the outside, $30 billion on the inside."
The so-called set-top box has become an early focus in the development of interactive TV.
As envisioned, the box will be a relatively powerful computer capable of sorting through a myriad of information and entertainment choices. It also will have to "decompress" compacted digital signals fed into it, a complex task made necessary by plans to squeeze huge amounts of information into the same wires that now carry only a few programs.
The box also may be asked to provide high security.
Providers of content want the box to prevent consumers from copying programming without paying. System operators want the boxes to help defeat hackers' attempts to gain access to the huge, computerized network. Consumer advocates want security to preserve the privacy of consumer information, such as credit card numbers used to pay for home shopping purchases, and to let parents make sure their kids don't watch pornographic movies.
If it is to be solved, it will require a clever combination of inexpensive but powerful computer chips and innovative new software, two of Silicon Valley's strong suits.
Intel, for example, is allied with Microsoft Corp. and General Instrument Corp. to develop a family of set-top boxes they would sell to cable companies. Not only would Intel sell its microprocessors for such boxes, but it also envisions a market for its communications chips, encryption technology, decompression schemes and even solid-state "flash" memory to store information or programs for later viewing, said Avram Miller, vice president of corporate development.
Other firms, such as Silicon Graphics, will compete to supply chips for the boxes. And H-P envisions selling peripherals such as color printers or hand-held computing devices that plug into the set-top box and swallow information. Apple's Newton and other "personal digital assistants" will probably be able to connect to the network, perhaps even helping control the set-top box.
But the biggest part of the system - and perhaps the most difficult - to create will be software. Interactive TV will require both network and data manipulation software, which consumers won't see, plus an important piece they'll see all the time: the "user interface."
As in the PC business, everybody expects Microsoft to be a force in developing the operating system and related software for interactive TV, and the company is reportedly working with cable provider Tele-Communications Inc. and cable and media giant Time Warner Inc. to develop it.
But Microsoft won't be alone. Apple covets a piece of that software pie, as does its joint venture with IBM, Kaleida.
The interface must perform a difficult task. It must present viewers with choices - expected to number in the hundreds - as well as provide the means for two-way communication, whether it's playing along with on-line games or examining merchandise in a video shopping mall.
Apple has been working on a system for several months. Microsoft has said it's working on an offering that would draw on technology of its Windows computer interface but not look the same.
But the box and the software that makes it go aren't all that's needed from the high-tech industry to make interactive TV work.
"We're proposing to put together the world's largest transaction-processing network," said Robert Frankenberg, vice president of personal information products at Hewlett-Packard.
That will require high-speed computers to route video plus audio and text information from source to destination. The system will demand huge data storage devices, or millions of small ones, to hold the data until it's requested by a consumer.
It will require advanced networking technology to hook it into the banking system for financial transactions and to keep it reliable.
With all these niches to fill, there's plenty of competition. There's also plenty of room for big-time failure if consumers don't swallow the hype.
"If it does happen, the cost of not playing in the market could be serious," said Intel's Miller. "If it doesn't, it's no great tragedy for a company in the computer business, because 90 percent of our investment [in interactive TV] is already applicable in the computer market.
"It's a no-brainer."
by CNB