Wireless Home Entertainment, Part III

Home entertainment networking using 802.11 sounds like it can’t miss, but according
to some of the people we’ve talked with, it will be a few years before it’s
a mass-market proposition.

The technology isn’t quite ready and key players such as set-top box makers
and digital cable and satellite service providers won’t be believers until it
is. The market, meanwhile, is fragmented.

A surprising number of technically savvy consumers, though still a tiny minority,
have started to experiment with home entertainment networking at a fairly primitive
level — using PCs as personal video recorders (PVRs) and streaming MP3s to
their stereo systems. For most consumers, though, it’s still a vague concept
at best.

That pretty much sums up the sober-sided, glass-half-empty perspective on the
subject. Now meet San Diego-based Magis

Magis claims to be, and probably is, the leading maker of 802.11-based chipsets
designed to support home entertainment networking. One other contender is ViXS System of Austin, TX.

Magis appears to have a slight lead at this point. Chipsets based on 802.11a
and Magis’s proprietary Air5 MAC-layer Quality of Service (QoS) technology are
almost ready for shipping. (The Air5 technology also supports HiperLAN2 and
Wireless 1394 standards.)

"We’ll do demos in December and field trials in the first half of next
year," says Magis executive vice president Pete Fowler. "Assuming
they go well, we’ll see commercial deployment in 2003."

The company claims Air5 not only solves 802.11’s QoS problems — ensuring undisrupted
transmission of multiple high-bandwidth HDTV signals from room to room in a
home — it also improves 802.11a range and throughput performance. It will deliver
40 Mbps at up to 250 feet, Fowler says.

In addition, Air5 provides beefed-up security in the radio link. Reliable security
is crucial for content providers who will want to make sure war drivers can’t
intercept signals on a home WLAN and steal DVD-quality pay-per-view or video-on-demand
movies, Fowler notes.

The performance claims for the Magis technology appear to answer
the concerns
of rival 802.11 chipset maker Intersil of Irvine CA. Intersil believes 802.11g,
with its superior range, will become the preferred standard for home entertainment

The trouble for Intersil is that 802.11g isn’t a standard yet, but 802.11a
and Air5 are here now. Furthermore, as Fowler points out, 802.11a offers superior
capacity in terms of numbers of non-interfering radio channels. This will be
important in avoiding interference between WLANs in, say, adjacent apartments.

Intersil vice president of marketing Chris Henningsen and Michael Greeson,
senior analyst and director of broadband research at Dallas-based market research
and consulting firm Parks Associates,
also both told us that set-top box and consumer electronics manufacturers will
be inclined to wait for finalized standards before committing wholeheartedly
to wireless home entertainment networking technology.

If that’s the case, how can we explain Magis’s roster of strategic investors?
It includes cable TV service providers AOL
Time Warner
and Charter Communications,
set-top box maker Motorola and consumer
electronics manufacturers Hitachi, Sanyo and Panasonic
(Matsushita Electric Industrial Co. Ltd.)

It’s the "whole [home entertainment] food chain," as Fowler notes.

Although he can’t or won’t reveal product plans, the clear implication is that
all of these companies are also, directly or indirectly, Magis customers.

Not surprisingly given the state of its technology development, Magis is a
good deal more bullish on the home entertainment networking market than anybody
else we talked to.

Analysts like Greeson, Fowler argues, have failed to take into account the
dynamics of the cable industry. Big service providers have made huge investments
in infrastructure to enable new digital services. Now it’s logical that they
turn their attention to the set-top boxes that will allow them to exploit this
new infrastructure.

One key objective for cable and satellite multiple system operators (MSOs),
he points out, is to break the set-top box logjam and find ways to increase
the amount of revenue they can generate from each subscriber.

Right now, subscribers must have a set-top box on each television in order
to bring in digital programming such as cable TV, pay per view and video on
demand movies. Many consumers balk at digital cable and satellite services because
of the extra expense of multiple set-top boxes.

However, with the Magis technology, it would be possible to install one gateway
device that could distribute services — cable TV, DVD-quality video on demand,
CD-quality music, Internet access, etc. — to TVs, PCs and stereos around the

The remote devices would be equipped with relatively inexpensive "thin-client"
Air5-based devices — either built-in or added on — that would allow them to
tune in services and receive signals wirelessly from the gateway device.

In this environment, cable and satellite MSOs can hope to remove consumer objections
to their offerings, especially when consumer electronics manufacturers start
building in Air5/802.11a thin clients, and also sell more services — including
multiple simultaneous movies, voice-over-WLAN-based telephony and wireless security
camera services.

"This is huge for the MSOs, especially at this time in their market development,"
Fowler argues. "But analysts don’t see it. We’ve got to demonstrate it
to them."

While Magis’s strategy hinges on the role of MSOs and their suppliers, the
set-top box makers, and while it believes the MSOs are more interested and anxious
to move on wireless home entertainment networking than analysts like Greeson
say they are, the company also sees other more short-term market opportunities.

The first application will probably be point-to-point video. Powerful home
computers equipped with TV receivers and MPEG encoders can already function
as personal video recorders (PVRs), recording digital content to a hard drive.

With the addition of an Air5-based "dongle" — some kind of add-on
device, perhaps connected to a FireWire (IEEE 1394) port on the PC — the PC
could wirelessly distribute recorded programming to TV sets equipped with Air5
client dongles.

"That kind of thing is about 18 months away," Fowler says. "And
you know how quickly [the PC world] can ramp up [with new technologies.]"

Magis also sees corporate applications for its technology — enabling telephony
and video conferencing over office LANs. In fact, it concedes that data, not
home entertainment, will dominate the 802.11a market until about 2005.

While corporate and after-market point-to-point video applications will happen
first, Fowler believes the MSO-driven home entertainment distribution application
will evolve concurrently. By 2006 and 2007, Magis sees home entertainment applications
dominating the 802.11a space.

So who’s right? Do wireless home entertainment networks start taking off in
months or in years? Companies like Magis and ViXS,
which has a similar vision and technology, are clearly betting on an earlier
rather than a later breakthrough.

Analysts, appropriately, remain skeptical. Show me, they say. Magis intends
to do just that.

Will we ever have wireless video? Join us at the 802.11 Planet Conference & Expo, Dec. 3-5 in Santa Clara, CA. One of our sessions will cover “Distributing Entertainment Media in Home and Office.”

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