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NCI Is Bullish on "Info Appliances"

Redwood Shores, Calif. -- With the glassy towers of its
parent, Oracle Corp., looming nearby, a demonstration room in Network Computer Inc.'s
low-rise offices here showed proof of the company's singular focus: "information
appliances," and especially those connected to broadband networks.

During a briefing and product demonstration May 22, NCI
executives were adamant that the converging data and TV future will include dozens of
different information appliances, and NCI wants to be in the software thick of them.

So far, NCI has identified alliances with
Scientific-Atlanta Inc., Pioneer New Media Technologies and General Instrument Corp. as
planks in an aggressive business plan to lock up "middleware" market share.

NCI is also trying to get a foothold into the Time Warner
Cable's Road Runner/MediaOne Express merger as a "secret" technology
partner, sources have said, and it is likely using Oracle's sizable coffers to secure
a technological foothold there.

NCI executives would not comment on the twisting
high-speed-data merger or on the company's rumored involvement, nor would they
discuss reports of their rival, Microsoft Corp., entering the mix at the last minute with
a $400 million offer.

On the hardware side, Pioneer is NCI's most recent
partner, saying last month that its "Passport" suite of software will include
NCI's DTV Navigator "to provide a Web-enabled application with HTML [HyperText
Markup Language] capabilities," said Jim Slade, vice president of Pioneer's
cable and communications division.

Slade said Pioneer's decision to work with NCI was
mostly driven by Time Warner's interest in NCI.

"What started the discussions was a realization that
we better have some relationship with NCI, or at least be able to ensure interoperability
with them, because our biggest customer is Time Warner," Slade said, speaking of Road
Runner's parent company.

NCI's place in the video chain is in middleware, which
it defines as software that sits on top of an operating system and that makes incoming
Internet content look and perform well.

"It's a set of client [set-top-box] software --
the tools to customize content, software-driver-developer kits, porting kits and
training," explained David Limp, director of marketing for NCI.

Limp and other NCI executives predicted that the number of
devices connected to IP (Internet-protocol) networks -- including set-tops, cable modems
and other, as-yet-undefined appliances -- will lap the number of home personal computers
sold by 2004, and that by 2010, nine out of 10 such devices shipped will not be PCs.

"We think that in the long term, this is a gigantic
market, and we want to be the leader in information-appliance software that gives
everybody access to the Internet," Limp said. "It represents the entirety of our
focus for the next 18 months."

Using a prototype set-top manufactured by Acer Computer
Inc., connected to a local cable feed and outfitted with an Ethernet connection, a
486-grade microprocessor and 4 megabytes of memory -- a configuration that Limp called
"our thickest client" -- NCI showcased a score of applications. These ranged
from a sort of picture-wall electronic-programming-guide grid to a "Media
Critic" application that lets users throw pies at anyone or anything on the TV

NCI's DTV Navigator is slim enough to run on less than
1 MB of memory within a set-top, Limp said, with most of the thrust located in a
headend-based server and database.

All applications running on DTV Navigator were written with
commonly used Internet tools, like HTML and JavaScript, Limp said, and they will translate
to the TV screen almost in the way that "plug-ins" work with Internet browsers

Applications that will plug into DTV-enabled set-tops will
likely include enhanced-TV information, synchronized TV and Web programming, e-mail and
Web browsing, among others, Limp said.

To put Web content on TV, Limp said, NCI makes four things
happen: First, text is "anti-aliased" and scaled to fit on the TV screen.
Second, colors are corrected, because reds often bleed, and "Coca-Cola red that looks
fuchsia will almost certainly be a problem, from an advertising perspective," Limp

Third, the software eliminates "flicker"
associated with the interlace-display format of analog TVs. Finally, and most difficult,
the layout is established -- frames, forms, cable images and coding, so that images can be
scrolled vertically, but not horizontally.

On the drawing board: a "universal in-box," which
collects e-mail, incoming video-mail messages, caller identification and faxes for display
on the screen. NCI executives were quick to point out that the universal in-box, as well
as IP-phone or videophone options, are not quite ready for primetime, but they noted that
the niche is a potentially important one for cable operators.

NCI's business model is not "pay-per-click"
-- it is based on one-time compensation that cable operators pay based on the number of
subscribers using specific applications that run through DTV Navigator, Limp said.

"We're not in the content or revenue-sharing
business. We sell software so that when a subscriber uses it, we get a fee," he

Limp declined to discuss pricing specifics or
"maintenance" fees that will also be charged. "It's basically just the
model used by database and browser businesses today," he said.