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Moxi Digital reportedly facing trouble, cash low for server rollout

Mon, 02/18/2002 - 7:00pm
Anne Kerven

Copyright 2002 San Jose Mercury News

All Rights Reserved

San Jose Mercury News…02/16/2002

From Lexis-Nexis

Moxi Digital, the high-profile Palo Alto start-up that recently unveiled a "home media server" to rave reviews, is burning through cash at a robust rate and is seeking a white knight, according to sources familiar with the company's plans.

Moxi was formerly known as Rearden Steel.

AOL Time Warner is said to be among those considering buying the company, sources said. Moxi earlier approached EchoStar, the parent company of Dish Networks, but was turned down.

Moxi, led by 41-year-old WebTV co-founder Steve Perlman, obtained $67 million in venture funding from high-caliber venture firms. Moxi's product, the Media Center, received solid reviews at the January Consumer Electronics Show. The MC is a $400 box that could show up in homes by the end of the year. It controls multiple forms of digital entertainment and information in the home, functioning as a cable or satellite receiver, digital video recorder, music jukebox and computer networking hub.

However, Moxi has run into hurdles as it tries to distribute its product — and there's doubt about whether it has enough cash to go it alone.

Kevin Fong, a venture capitalist with Mayfield Fund and a board member at Moxi, would not comment on the company's thinking. However, he hinted at the quagmire Moxi faces: "The space has so many players it needs to be friendly with," Fong said. "The question is: 'How can it work with them all, when many of those players hate each other?'"

Among the fierce competitors that are potential customers of Moxi: satellite TV providers EchoStar and DirecTV, and cable titans Comcast/AT&T and AOL Time Warner, along with a number of smaller cable operators.

EchoStar representative Marc Lumpkin said his company — an investor in Moxi — would like to license parts of Moxi's software, and that a purchase of Moxi by EchoStar competitor, AOL Time Warner, wouldn't necessarily rule out that option. AOL Time Warner would not comment. AOL Time Warner perceives Moxi as possibly the perfect product to unify the consumers of AOL and Time Warner products, the sources said.

Moxi also has competition. Sony, the consumer electronics heavyweight, and Microsoft, the PC software giant, are also developing variations of the home media server.

EchoStar Communications, parent of the Dish Network satellite TV service, says it still plans to test Moxi this summer and could start offering it to its 6 million subscribers late this year or early in 2003.

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