ICTV's last stand: HeadendWare

Sun, 04/28/2002 - 8:00pm
Jeff Baumgartner

ICTV Inc. awakened from its public slumber Monday with the commercial availability of HeadendWare, a software platform designed to deliver iTV services and applications originally tagged for advanced digital set-tops — such as the DCT-5000 — to millions of already-deployed "thin-client" digital boxes.

Already more than 10 years old and having little in terms of deployments to show for it, Los Gatos, Calif.-based ICTV is placing its final bet on this product.

"This is where the rubber will meet the road," said ICTV President and CEO Wes Hoffman, who also serves on the board of cable modem and home networking equipment vendor HighSpeed Surfing.

ICTV, as it has preached for years, said HeadendWare will place most of the intelligence and processing at a cable operator's headend, eliminating the need for MSOs to change-out their current boxes with more powerful, but also more expensive, digital set-tops.

Though operators have shelved their plans for the original DCT-5000 following a spate of hardware-to-software integration headaches, ICTV's approach provides an alternative that can be integrated and ready to go in a matter of days, Hoffman said.

ICTV said HeadendWare is designed to funnel to any digital set-top a variety of interactive applications, including games, music-on-demand, interactive advertising, Web browsing and e-mail.

Using MPEG and DolbyAC3 encoding, the HeadendWare software taps into rack servers powered by standard Intel processors.

The bulk of ICTV's software will reside in the headend, but a relatively small 75 kilobyte software module will be housed in the set-top to help customers select applications.

HeadendWare will leverage off-the-shelf hardware and plans to sell the reference design to other parties. That strategy is a marked departure from ICTV's original digital line of attack, which called for the company's blend of proprietary software and headend gear. Hoffman said the plan now is to populate the hardware with standard servers and interfaces such as Gigabit Ethernet.

The business plan for Headendware consists of a one-time software license fee and possible additional fees tied to MSO support that ICTV might provide about a year following deployment, Hoffman said.

He acknowledged, though, that HeadendWare might be ICTV's last chance to make hay.

ICTV's only significant traction as of late came via a trial with Charter Communications in Kalamazoo, Mich. That test, launched to "friendlies" earlier this year, is leveraging ICTV's original digital hardware/software combination for a TV version of the Charter Pipeline broadband and e-mail service.

Since then, Charter has shifted its focus significantly, choosing instead to move forward with more powerful Broadband Media Center sidecars and stand-alone boxes via the MSO's cooperative relationship with Motorola Broadband and corporate cousin Digeo Inc., which recently signed a deal to merge with Steve Perlman's latest venture, Moxi Digital Inc.

"ICTV's challenge is to complement that part of [Charter's] business," Hoffman said.

ICTV's largest financing round came in June 2000, when a large group of investors, including Lauder Partners, Cox Communications, ACTV Inc., Liberty Digital, Motorola Inc., OpenTV Corp., Shaw Communications and Gemstar-TV Guide International, put up a combined $87 million.

Though ICTV has generated little revenue during its lifetime, ICTV's strategic partners continue to fund the company, although they could step in to help with another investment round, Hoffman said, noting that ICTV has a combination of debt and equity to get the company through the end of 2002.

In the meantime, ICTV hopes to win some support for its HeadendWare approach at next week's National Cable Show in New Orleans, where it already has meetings set up with four of the top five MSOs. Hoffman said ICTV has one trial agreement on an undisclosed MSO's S-A system etched in stone, with installation expected to start in late May or early June. If ICTV doesn't find success this year, "we're going to have to look at alternatives," Hoffman acknowledged.

He was vague about what those alternatives might be, but an acquisition might not be out of the realm of possibilities for ICTV, which today has about 80 employees, most of them on the engineering side.

Microsoft Corp. made an offer for ICTV about two years ago in an effort to add a "thin-client" iTV play, but ICTV's board didn't find the dollar figure attractive enough. Later, in Feb. 2000, Microsoft bought Peach Networks Inc. for about $75 million.

"I wouldn't be surprised if [Microsoft] didn't come look at what we are offering," Hoffman said of ICTV's HeadendWare product.


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