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CacheVision Has PVRs, More on Board

Like a Romulan Warbird from Star Trek, CacheVision Inc. will decloak today (Aug. 27) to reveal its three-part personal video recording strategy comprised of software, storage modules and stand-alone or sidecar boxes.

CacheVision, a 50-50 joint venture of hard-drive marker Seagate Technology Inc. and consumer-electronics giant Thomson Multimedia, was formed in July 2000 "to develop and market digital storage solutions that are PVR based," said company president and CEO Richard Johnson.

That said, CacheVision's plans don't start and end with the PVR. PVR functionality is merely the "lowest common denominator" in the company's big-picture strategy, Johnson said.

"The challenge is to identify other revenue options the operator can deploy to provide the service to the consumer," Johnson said.

On the modular front, CacheVision will attempt to craft deals with consumer-electronics makers plotting to market set-tops and televisions with on-board PVRs.

Though Thomson is CacheVision's most obvious original-equipment manufacturer (OEM) candidate, the company is meeting "with all of the major set-top box manufacturers," Johnson said.

Also on that list are Scientific-Atlanta Inc. and Motorola Broadband Communications Sector, which between them account for the lion's share of the U.S. digital-cable box market. Those companies "have significant engineering capabilities in-house, so we have to find ways to add value in those boxes," Johnson said.

Also on CacheVision's roadmap are stand-alone OpenCache PVR boxes and sidecars that would synch up with digital set-tops. Johnson said the company's first generation modules and boxes will feature 40-gigabyte hard drives, enough to record about 40 hours of video at a standard-resolution setting.

CacheVision isn't the first company to tap into sidecar opportunities, now that set-tops with integrated PVRs and headend-based video time-shifting products have proven slow to develop.

Keen Personal Media is marketing a cable-centric PVR sidecar, and it's testing the technology with MSOs such as Adelphia Communications Corp. And ReplayTV Inc. has said it is currently discussing the concept with several MSOs.

Johnson said CacheVision's real bread-and-butter focus is on a client-server relationship that employs the company's hardware and software.

Through this approach, CacheVision hopes to market its products to cable operators as an infrastructure component. Its OpenCache Delivery Suite marries the company's client software and digital-storage elements to a headend-based broadcast facility that delivers time-shifting and other "personal media services" such as targeted advertising, "virtual" VOD and video jukeboxes.

MIDDLEWARE TALKS ONGOING

CacheVision's client software, which resides in those devices, is being designed to extend the capabilities of today's PVRs. The company has started talks with set-top box middleware vendors and expects to announce partnerships by the fourth quarter of 2001, Johnson said.

CacheVision will begin its deployment game plan with small volume trials in the fourth quarter of this year, and then proceed with larger commercial trials in the first half next year, according to Johnson. It will then ramp up production during the second half of 2002.

While the technology itself assumes a high spot on Cache-Vision's PVR agenda, pricing is also important. Johnson said today's PVR price points — at $599 to $799 before rebates and subsidies — prevent the technology's penetration level from rising above a meager 1 percent to 2 percent.

Penetration levels tend to rise to the 25-percent to 30-percent range when new consumer technologies fall to about $199 per unit in price, as red-hot DVD players did about a year ago.

CacheVision's first wave of PVR stand-alones and sidecars will enter the market with one tuner, because "our approach has been to drive the lowest possible cost," said company vice president of marketing Stevan Eidson.

But CacheVision technology can support multiple-tuner units, which are currently on the drawing board. "There are still some things that we have to overcome," he said.

For example, about 50 percent of TV viewers aren't willing to pay for a PVR service, and only about 6 percent would pay the typical $9 per month now being charged, Johnson said, citing TechTrends research.

Instead of offering PVR functionality as a separate service fee, network operators could recoup costs and drive additional revenue from advertising and other services.

By the same token, digital storage will also require additional content before consumers truly understand the value of the technology. Applications such as subscription-video-on-demand and digital-music storage could provide that content, Johnson said.

"We don't touch the end-user directly," Johnson said, noting that CacheVision will seek market entry via vendors such as Thomson, Sony Corp., Philips Consumer Electronics and Panasonic Consumer Electronics, as well as cable and satellite service providers.

The fact that Thomson is a large investor will likely benefit CacheVision's OEM strategy, but it isn't necessarily a guarantee.

"We have to earn our keep," Richard said in describing the CacheVision-Thomson relationship. "We can't expect to get a deal just because we're a partner.

"We hope very much to appear in Thomson products, but it will be up to them to make those formal announcements."

Looking ahead, CacheVision's storage capabilities, when coupled with a fast broadband connection, could also be used to download movies from the Internet. Recently, five major Hollywood studios —Metro-Goldwyn-Mayer Inc., Paramount Pictures, Sony Pictures Entertainment, Universal Studios and Warner Bros. — disclosed plans to offer a library of on-demand films directly to consumers, via the Web.

And critics of handling storage on a hard drive have maintained that such equipment can be unstable and has the propensity to crash on occasion.

Johnson said Seagate runs a test center that can check the durability of the hard drives, and basically "puts these consumer electronics products through hell." He said Seagate's testing facility would be open to all of CacheVision's OEM partners.