Digeo Cuts Staff in Half

Digeo on Tuesday laid off 80 of its 160 employees -- halting development for two of its retail high-definition digital video recorders -- and said CEO Mike Fidler will leave the company.

With Fidler's departure, Digeo president and chief operating officer Greg Gudorf will assume the CEO role. The Kirkland, Wash.-based company is backed primarily by Paul Allen's Vulcan investment firm.

"With our revised product strategy, it made sense to realign our leadership team as well," Fidler said, in a prepared statement. "While the new strategy is absolutely the right thing to do for Digeo's business, Greg and I both profoundly regret the personal consequences of this action for our employees who will be affected."

The laid-off employees are "mainly in positions that are not critical to development of the new products," the company said.

With the cutbacks, Digeo will scrap two retail DVR products it had previously announced: the delayed Moxi Multi-Room HD DVR and the Moxi Home Cinema Edition DVR. Instead, Digeo said it will focus on its next-generation consumer DMR, which Digeo has been developing at the same time as the cancelled projects.

Gudorf, in announcing the changes, said Digeo had been "spreading our energies across too many platforms. This focused strategy promises to bring a set of advanced and compelling DMR [digital media recorder] features to consumers, at the right cost and at the right time. We remain committed to bringing the best television experience to our customers and we are confident that we'll emerge even more successful as a result of this focusing effort." 

Digeo's Moxi HD DVR for the cable industry is being tested now, according to the company, and will be released as planned. To date, about 400,000 of Digeo's existing DVRs have been deployed in 100 markets by eight cable operators nationwide.

Digeo had planned to launch retail versions of its Moxi high-definition DVRs before the end of 2007, but the products hit development delays. The company on Tuesday said it would announce details on its new retail product later in the year.

Last week at the Consumer Electronics Show in Las Vegas, the company was touting four new partnerships to deliver photos, music, games and information to its forthcoming retail DVRs. Digeo said current content and development partnerships will remain in place for the more tightly focused product strategy.

As part of its restructuring, Digeo said it will "flatten the structure of the development organization." Three new engineering groups will now report directly into the office of the CEO to ensure "greater accountability and transparency," the company said.