Originally created 01/14/02

Multiple entertainment device wows show



LAS VEGAS - It was the mostly eagerly awaited announcement of this year's gadget extravaganza, the annual Consumer Electronics Show. And the reality - for once - may have exceeded the hype.

A Palo Alto, Calif., start-up founded by the inventor of WebTV unveiled a VCR-sized device that could prove to be the Swiss Army knife of home entertainment. Moxi Digital Inc., known until now as Reardon Steel Technologies to keep the nosy off track, took the wraps off a box that can record up to four television shows at once, store 60 hours of TV programming, play DVDs and music CDs, house thousands of tunes and digital photos on a hard disk and wirelessly broadcast that content to TVs, computer screens, and stereo speakers throughout the home.

In addition, the device, called the Moxi Media Center (MMC) can be hooked up to the Internet and act as the hub of a wireless network that connects PCs, printers and other digital devices.

While some electronic boxes have been able to combine a few elements of home entertainment, analysts say Moxi goes far beyond anything that is now available. And as the holiday season showed, the buying public has a recession-resistant appetite for consumer electronics.

"I think this will completely change the game," said Josh Bernoff, principal analyst with Forrester Research in Cambridge, Mass. "You are looking at the next generation entertainment device."

But the MMC won't be showing up at the local Circuit City anytime soon. Steve Perlman, Moxi's founder, said the company plans to license the technology to cable and satellite TV companies, which would then have the units built on a contract basis. The MMC devices then would be distributed by the cable or satellite TV providers, the same way they now distribute cable boxes and satellite TV receivers.

Some of Moxi's $67 million in funding has come from AOL Time Warner, the nation's second-largest cable company. Another investor is Vulcan Ventures, which is owned by Microsoft co-founder Paul Allen. Perlman noted Monday that Allen also is a major shareholder in Charter Communications, a large cable TV company and a potential customer of the technology.

The first user of the Moxi technology will be the nation's No. 2 satellite TV broadcaster, EchoStar, which plans to deploy the technology by the end of 2002. EchoStar has a deal to buy DirecTV, the nation's largest satellite TV company, for $25.8 billion. The two companies' combined customer base of 17 million subscribers could provide enough muscle to pressure cable operators to begin offering the technology or lose subscribers. "By the end of next year, cable operators will be under pressure to have this in place," Bernhoff said.

During a demonstration to analysts and media, Perlman showed how the MMC could simultaneously show a DVD movie on one television, play recorded music to a set of speakers, record a television show from a satellite dish and play a previously recorded show on another television. Such capability could be provided in a box that costs cable and satellite companies about $425, Perlman said. But connecting that box to other TVs would only cost about $50 for each additional TV - the cost of a wireless receiver.

Bernhoff said new cable boxes with recording capability in development by other manufacturers currently cost between $400 and $500 for each television and don't provide the music, DVD or computer networking features that the Moxi does.

Carl Howe, another Forrester analyst, also praised the technology, but cautioned that there was one potential downside. In a society where many people can't set the clock on a VCR, how many would be willing to learn to manage a much more complex gadget?

That is also a question that the folks at Microsoft might be pondering as the company begins to lay out its vision of a connected home run by its Windows XP operating system. In his keynote address to an assembled throng, Microsoft co-founder Bill Gates detailed several new wireless technologies that would allow users to use the PC as a digital entertainment hub. Among the technologies Microsoft is developing is a system called Freestyle that promises to allow PC users to play music, view photographs and record television shows via a remote control.

Such companies as Hewlett-Packard, Samsung and NEC Corp. already are working to incorporate the technology into their PCs. Gates also showed off a tablet-like device code-named Mira that a user could carry around the house. The device would connect wirelessly to a personal computer. Such a tablet could cost around $500 and let users read e-mail, access music files, download recipes and perform other computer-related activities but not be tethered to a PC.