Rearden Steel unveils multimedia system
After two years of secrecy, start-up Rearden Steel will jump into the home entertainment market Monday by announcing its first products and a name change at the Consumer Electronics Show in Las Vegas.
The Palo Alto, Calif.-based company will announce that its
new name is Moxi Digital and its first products will be the
Moxi Media Center (MC) and Moxi Media Extension (MCx). As
previously reported, the company designs software and
hardware for cable and satellite set-top boxes that lets
them effectively function as digital entertainment centers.
With an MC, consumers will eventually be able to send
e-mail, download video, play games and perform other PC-like
tasks on the TV.
Satellite television company EchoStar, an early investor in
Moxi Digital, is working to add Moxi's software to
EchoStar's advanced satellite television receivers.
Moxi debuts in what is shaping up to be the latest gold rush
for technology companies. Microsoft, Intel, Apple Computer
and the major PC companies, among others, are coming out
with technology that will bridge the gap between the TV, a
fixture in the home, and computer technologies. As in the
original gold rush, many of these attempts will fail.
Component costs, customer indifference and other factors
have doused the enthusiasm behind past interactive TV and
earlier PC-TV experiments. Still, hope springs eternal.
"I don't think we've seen a product yet for pent-up demand,"
Jon Peddie, CEO of Tiburon, Calif.-based Jon Peddie
Research. "The problem is, to put all the stuff in that
people want, there is a challenge with the bill of
materials...For a home entertainment center, you have to do
video and audio."
While the company will certainly tout its technology, Moxi's
ultimate advantage may come its accommodating spirit. The
company works with carriers to ensure that Moxi services can
be integrated easily and relatively inexpensively.
"One of the lessons I learned at WebTV was that if you go to
operators and say, 'Here's the design, I hope you like it,'
you're not going to make it with broadband operators,
because each has his own idea about what they want," said
Moxi CEO Steve Perlman in an interview with CNET News.com.
"So this company (and its products) from the ground up is
designed to be extremely flexible. We're processor,
networking and graphics system independent."
Perlman co-founded WebTV in 1995 and later sold it to
Microsoft in 1997 for an estimated $500 million.
The approach, said analysts, is part of the company's
"The high cost of set-top boxes is one of the main reasons
why cable companies have been slow to adopt any type of
interactive solution," Yankee Group analyst Aditya Kishore
The Moxi MC is a set-top box design using the company's
middleware, which runs between a modified version of the
Linux operating system and interactive services, such as a
digital video recorder, digital music jukebox, enhanced DVD
playback as well as online capabilities including instant
messaging, e-mail, Web browsing and chat. It serves as the
focal point for digital content in the home and can
wirelessly, or through wires, communicate with other
consumer electronics devices, such as televisions,
throughout the home using the Moxi MCx, which serves as a
sort of a terminal for the set-top boxes using Moxi MC
software. The set-top boxes based on Moxi MC software can be
designed to include a modem, hard drive and Firewire ports.
In future versions of Moxi Digital's software, the set-top
boxes will be able to communicate with other devices so
consumers will be able to watch television programming on
handhelds or download video from camcorders to be displayed
on the television.
Moxi Digital will not manufacture the boxes, but will work
with customers, such as cable and satellite companies, to
incorporate its technology into a customers existing
infrastructure. Moxi will also assist in designing set-tops.
The company aims to generate revenue through software
Perlman acknowledged that Moxi is playing in the interactive
television market in the sense that it is going after the
same customers, cable and satellite companies, as Liberate
Technologies and Microsoft TV. Moxi, however, said it will
transcend competitors through a barrage of services.
"Interactive television, as it's been conceived in the
Microsoft TV and Liberate (Technologies) camps, is dead on
arrival. Annotating a broadcast with a couple of overlays is
just not anybody's idea of value added entertainment. We're
about making all of your media available on demand and
throughout the house," Perlman said.
Meanwhile, the company will couple home user demand with
cost cutting at the back end. Cable companies pay for the
set-top boxes that allow digital programming to be viewed on
a subscriber's television, in return they receive monthly
fees. But if a home has more than one television and needs
more than one set-top box, the cable company has to pay for
two boxes and they generally receive revenue from only one
"The real value of Moxi's solution (to cable companies) is
that it allows multiple television sets to have digital
programming without the need for more than one set-top box
and that drastically cuts down on costs, especially for
cable companies," Kishore said.
Cable companies are also faced with the loss of digital
cable subscribers to either satellite companies or those
switching back to the less expensive analog cable
service--this is referred to in the industry as churn.
Current churn rates for cable companies are in the 10
percent to 15 percent range, according to industry
estimates. New services could help reduce the churn rate.
The downside though is that, even though the average U.S.
household has 2.3 televisions, only 20.4 percent of the
digital cable subscribers have more than one set-top box,
according to Yankee Group data.
"And Moxi won't be getting all of those subscribers,"
Moxi Digital's response is that the company is not only
going after homes with more than one digital cable set-top
box, but also homes with one box, and that its software
enables more features than cable boxes currently in the
However, Moxi also has powerful friends. EchoStar, America
Online, Vulcan Ventures, Cisco Systems, The Washington Post,
Macromedia, Mayfield and The Barksdale Group contributed to
Moxi's $67 million first round of funding.
The EchoStar deal is a significant boost, even if the
DirecTV acquisition were to go south, but Moxi's future,
according to Kishore, will depend on more distribution
agreements. EchoStar has about 6 million satellite
subscribers in the United States and is awaiting approval
for the acquisition of DirecTV, which has about 10 million
subscribers in the United States.
Also Monday, Moxi Digital is expected to announce that it is
using Macromedia's Flash Player 5 and RealNetworks' RealOne
streaming network player. Moxi has been working with the NDS
Group to create a secure platform allowing consumers to pay
for services through its television.
Moxi Digital employs 117 people and has 57 patents pending.
"Moxi's plans are very ambitious and there will be plenty of
pressure from companies of all sectors watching to see if
they can pull this off," Kishore said.