You are very bullish on Eastern Europe. Can you tell us a bit about IP TV potential in that region?
Well, apart from the specific large IP TV deployments like France Telecom, Telefonica, Fastweb, PCCW, certainly the strongest growth is in Eastern Europe. For us also Eastern Europe represents the largest growth area. We are seeing a lot of growth in Russia, Estonia, Latvia and Slovenia. Obviously they are putting an infrastructure in to those countries that is driving IPTV. In addition, there is not a strong cable and satellite presence. So there is not so much competition.
You are a UK based company. What is the current status of IPTV market there?
In general, IPTV market in UK has been slow in comparison to other areas of Europe. The major reason is the dominance that Sky, the biggest satellite TV operator, holds in the market. With Sky having such a strong influence on both the content and broadcast, it becomes difficult to come in with a competitive offering.
How many subscribers are we talking about in the UK?
There are under 100,000 IPTV subscribers in UK at present.
Who are the service providers serving them?
Homechoice has some 40,000 IPTV subscribers. Obviously with the Tiscali acquisition they had some cash injection. They just announced a new plan to roll out IPTV. It is very much focused on London area.
What about BT? They had a partnership going with Microsoft a long time ago?
That is what put BT in a difficult position because they chose to go with Microsoft. Most of the other large telcos who have chosen Microsoft have struggled to deploy IP TV because of the delay in getting the whole technology piece put together.
How do you explain IP TV success in France and Spain?
These countries have heavily invested in getting the infrastructure up to speed. The service provides there also use their own in-house middleware and CAS as opposed to buying in.
What are the main reasons that have held back the commercial deployment of Microsoft IPTV middleware?
I think their solution is highly featured and highly functional. It offers a very high end solution. That makes it inherently complex. It is also significantly more expensive.
Can you share with us your vision of how an IP STB develops from here? What functionalities it will absorb etc?
Clearly at this point in time, the key push in on high definition, PVR and home networking. The drivers for that tend to come from North America where the demand from consumers is much higher in terms of functionality. But we are seeing that coming from Europe as well. MPEG-4, HD and PVR today are major issues. I think looking forward home networking will be a big issue. There is a philosophical discussion about what is better way of putting together a solution of individual set top boxes and home gateways. Do you package more in to the solution is the question. The set top box obviously can be the client end integration point for lot of the software applications.
What is the potential of IP TV in South America?
There are some areas in South America like Argentina and Brazil that can be good in IPTV rollouts. There are three big operators in Brazil –all competing very strongly on a similar service. Brazil Telecom, Telemar and Telefonica- all are pushing hard to get IPTV service deployed. They are kind of pushing each other along to make it happen. Again infrastructure wise Brazil has some DSL providers that are capable of delivering IPTV. Again there is not massive cable and satellite TV competition. In some of the more established markets like Central Europe –you got very strong satellite and cable providers but for Brazil and Argentina, this is not the case.
Where does home networking fit into your overall product strategy?
Currently the home networking capability that we use comes via third party plug in devices, which plug into our box. Clearly going forward we will need to build home networking technology in to the box.
Flash is a very good substitute to HTML or other user interface presentation layers. There is no IP set top box present in the market today that supports flash. What are your plans in this area?
The reason for using Flash is obviously better graphics on screen. Flash was designed to run on PC architecture devices. IP STB vendors have started to run applications that were designed for PC. So what happens is that the CPU inside runs out of power. One of the big issues with running Flash today is that it degrades the performance because it uses too much CPU power. That is one of the challenges. We have done a couple of Flash ports to our previous boxes. But we never had a solution that is really deployable because of the performance issues. We either need higher power CPU chips to do that or you go to the PC architecture where the price of the box goes significantly up. It is a bit of a trade off between price and performance.
Home entertainment solutions, such as the PlayStation, Xbox and Wii, are enabling services that will compete with those traditionally offered by IP set-top boxes. How big a threat do you think this is to IP set top box vendors like yourself?
If you are not interested in games and you just want to show content on to your television, you do not need all the game devices. Those devices I think will always primarily be game devices. Majority of TV viewers are not interested in having those games.