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Whistling across the bow

Wed, 02/28/2001 - 7:00pm
Roger Brown, Editorial Director, Broadband

Set-top manufacturers are preparing for a blitzkrieg
Roger Brown, Editorial Director, Broadband

There's a new battle for supremacy that's being waged, and even though it's aimed squarely at consumers' homes, it's going on without most people even being aware of the tussle. It's also not clear who's going to emerge victorious.

The skirmishes between home gateways and full-featured set-top boxes promise to become much more heated as device manufacturers make an all-out push for marketplace dominance. Of course, cable TV set-top boxes have an early lead in the battle for real estate, but gateways are being touted as the next big thing to come along.

Gateway suppliers concede that cable set-tops are currently in millions of American homes, but they dispute any notion that consumers want to route all of their entertainment and information through a single box that's located near the TV.

A home gateway, on the other hand, can easily act as the central gathering and routing point for signals of all types, proponents say. Whether it's located on the side of the home, in a closet, or down in the basement, such devices can be unobtrusive, yet provide incredible functionality.

Set-top manufacturers are marshaling their forces, preparing for an all-out blitzkrieg. Just last month, Pace Micro Electronics announced an alliance with Sega to support set-top based gaming via an on-board hard drive and download capability. Pioneer executives went on a press tour to announce the company had sold a million boxes to U.S. MSOs. Scientific-Atlanta worked a deal with MetaTV to add "smart" software to its box to help consumers navigate through programming options.

Pace is probably seeking Sega-type partnerships in order to differentiate itself in a highly competitive digital set-top market. Pioneer is finally putting some resources into North America to capitalize on its well-known brand. S-A hopes to continue its strong surge of late, and Motorola aims to retain its overall market lead.

What's not clear is whether Pace's identification of gaming as a killer app will come true. The concept is simple, and the demonstration worked well. Skepticism remains high in my mind after watching the glacial speed at which cable operators are deploying even rudimentary interactive TV.

Perhaps cable MSOs have been lulled by the recent loss of momentum in the DSL and overbuild sectors. But therein lies the danger. These set-top innovations aren't limited to just cable operators–satellite companies have shown a willingness to innovate when it comes to consumer devices. And if home gateways begin to strike a chord with consumers, cable could lose its dominant lead.

Consumers are ready to take control of their entertainment devices, and the most forward-thinking companies will benefit from that phenomenon. MSOs must stay abreast of consumer spending habits and preferences, or they'll continue to experience insidious but constant erosion of their market penetration.

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