Pace Quickens in U.S. Market

11/11/2001 7:00 PM Eastern

In a quest for more vendor variety, Time Warner Cable has picked up the Pace, accepting its first deliveries of the U.K. set-top maker's new digital set-top box.

Pace Micro Technology Americas has gained final approval to start shipping its 500 series box to Time Warner under a three-year, 750,000-unit deal forged in late 1999.

The MSO had largely been using boxes from Scientific-Atlanta Inc., which along with Motorola Inc. has held a virtual set-top duopoly in the U.S. cable market. Pace hopes to change that, according to Pace Americas president Neil Gaydon.

"We believe it is the start of real choice in the U.S.," he said. "Up until now, you just bought from S-A or Motorola.

"And Pace has shown that we can come into the market and deliver a new box with new styling, and we have added things," he added.

The MSO, in turn, is keen on expanding its vendor base, according to spokesman Mike Luftman. Time Warner buys boxes from Pioneer New Media Technologies, and has some General Instrument Corp./Motorola Inc. units it inherited through system swaps with AT&T Broadband.

"We think it is going to be a very high-quality box, and we are anxious to have as many vendors as possible," Luftman said.

Although it incorporates licensed S-A technology, the Pace 500 isn't simply a clone, Gaydon said. Although it shares the same cable-modem design and PowerTV Inc. operating system, the Pace 500 also boasts a single-chip design based on Broadcom Inc. 7100 silicon.

At 12-by-8-by-2.5 inches, Pace also claims its box is the world's smallest — and it believes that size will prove to be an advantage in the home and for operators.

"Customers want smaller boxes," Gaydon said. "There are so many boxes around their TV sets."

More importantly, "by making smaller boxes, you can cut costs," he said. Gaydon added the size will also hold benefits in the field, from the perspectives of taking up less storage room in warehouses and in vans when they embark for installs. "So in terms of cost of storage, again it saves them money," he said.

As with other "thin-client" digital boxes, Pace's 500 entry has no middleware component. It does sport a dual 80 MIPS (million instructions-per-second) processor design. That affords an 80 MIPS capacity set-aside to run the box and 80 MIPS to run applications.

It's also the first set-top box to gain the Energy Star power efficiency stamp and offers beefed-up surge-protection features, according to Gaydon.

As Time Warner requires its boxes to be VOD-capable, Pace will soon provide the software needed to port such systems from SeaChange International Inc., Concurrent Computer Corp. and nCUBE Corp., Gaydon said.

Now that Pace has a workable, economical and S-A-compatible box, it may indeed be able to attract more U.S. cable customers, said International Data Corp. cable TV analyst Greg Ireland. Pioneer has shown the viability of a third-party box with S-A compatibility, a lower price point and other features.

"All of a sudden, these little differences in the boxes become significant," Ireland said.

But though the introduction of Pace boxes into the U.S. cable mix is a good sign, it is way too early to say if it will precipitate a sea change in the market, Ireland said.

"I think it is good news that they have chosen Pace and other set-top-box makers, but I don't think it is a harbinger that we are on the cusp of breaking that duopoly," he observed. "In the cable industry things still divided on that S-A/Motorola fault line, and I'm not sure that duopoly is assured to be cracked."

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