Motorola Enters Set-Top Fray With Top-of-Line Digital Box

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A top-secret project from deep inside Motorola Inc. is set
to come out from the cone of silence this week, when the manufacturer will use a trade
show in Amsterdam, Netherlands, to debut an aggressively priced set-top box with high-end
features.

Quietly in the works for two years under the code name
"Blackbird," referring to a reconnaissance aircraft, the set-top platform will
emerge from Motorola's Consumer Systems Group in Austin, Texas -- where its
semiconductor chips are usually designed.

Motorola executives described the set-top as both a
reference-design motherboard and a turnkey private-label option for other
consumer-electronics makers. The company will officially unveil the device at the IBC show
in Amsterdam this week, and it will be shown to North American MSOs at the Western Show
later this year, executives said during a telephone briefing last week.

"Our plan is to establish this architecture as a key
element in the world's interactive broadband-multimedia infrastructure," said
Ray Burgess, vice president and assistant general manager of the Motorola division.

He described the new box as "a combination of a
broadband router, a network computer and a digital home-theater platform, all rolled into
one consumer package that costs inherently no more than any of the standard digital
set-tops."

The estimated cost range, depending on feature sets and
order size: between $300 and $600, Burgess said, adding, "We'll be ready to go
with a consumer-deployable product, in volume production, in the fourth quarter."

The Blackbird box had its early roots in Bell Atlantic
Corp.'s now-defunct "Unity" set-top design, Burgess said. When that project
aborted, Motorola went underground, gathered a group of silicon experts and came up with a
way to cram as many features as possible into a set-top, while keeping costs low.

Cable operators, while intrigued, were still skeptical last
week.

One senior MSO engineering executive who was familiar with
Motorola's plans called Blackbird "technologically interesting," but the
executive added, "We do not want to be locked into such an application-specific
platform," referring to the game environment.

As for Motorola's cost projections, the MSO executive
said, "What we really need is a digital box that costs no more than our present
advanced-analog boxes."

Motorola's first crack at a digital set-top will come
loaded with interactive features, 3-D graphics, MPEG-2 digital video, high-fidelity audio,
high-speed Internet access, electronic commerce, support for the Java software language
and broadband networking -- on one chip, Burgess said.

Under the eggshell-colored chassis are two key components:
a PowerPC chip and a "ProjectX Media Architecture," described as a high-end
software-programmable platform that handles multimedia streams.

Motorola worked with California-based VM Labs on the
ProjectX architecture, Burgess said, describing it as a way to decode MPEG-2 digital-video
and AC-3 digital-audio streams, while handling advanced graphics and networked games.

Because of its internal modularity, the Blackbird boxes are
"network-independent," meaning that they will run on cable's hybrid
fiber-coaxial networks, telcos' ATM (asynchronous transfer mode) networks or
Internet-protocol networks, he said.

Those design elements -- coupled with Sun Microsystems
Inc.'s "Java Virtual Machine," Spyglass Inc.'s Web browser and
extensive 2-D and 3-D graphics libraries, all running on Microware Corp.'s
"DAVID" operating system -- "make this the most feature-populated box
that's available today," Burgess said.

Jonathan Cassell, an analyst with DataQuest, said that
perhaps the most compelling feature that he saw in a pre-briefing of the Blackbird model
was its support for networked and set-top-resident games.

"It's certainly a platform that will catch the
eye of the consumer," Cassell said. "It fits into the evolution of the set-top
that we're seeing occur out there, from today's passive audio/video receivers
into an interactive, multimedia entertainment and communications system."

He described the Blackbird box as the "next step
above" General Instrument Corp.'s DCT-5000 and Scientific-Atlanta Inc.'s
Explorer lines.

Burgess said Motorola will focus on European and Southeast
Asian deployments first, but plans are under way to comply with the U.S. OpenCable
program, "after we work through the sticky issues related to conditional access and
how it's deployed."

GI and S-A own that piece of the puzzle, and they can
license it out to other manufacturers.

Internally, Motorola expects "about half" of its
incoming business to come from motherboard sales, and the other half from privately
labeled set-tops that it will make for other manufacturers over the next 18 to 24 months,
Burgess said.

Initial orders, not yet disclosed, will be split between
operators in Europe and Southeast Asia, he added.

Motorola's presence in the North American set-top
market "will be slower, unless, of course, TCI can't get their advanced-digital
set-tops on time," Burgess said, referring to an order placed by Tele-Communications
Inc. with GI for 15 million or more DCT-5000 boxes.

Cassell said the Motorola design "could well become a
play for consumer-electronics firms" that may want to get into the digital set-top
retail environment.

GI and S-A have said that they're prepared for an
onslaught of consumer-electronics competitors because their experience in integrated,
end-to-end systems will give them the edge that they need to rally.

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