Zenith, Thomson plan box-free ITV Sets

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In a move designed to marry channel surfing and Web surfing, Zenith Electronics Corp. will manufacture and market an interactive-TV set next year using silicon from Telecruz Technologies Inc.

At first glance, the Zenith TV appears to follow in the footsteps of Microsoft Corp.'s WebTV Networks Inc., which sells Internet access over the TV and has failed to attract a mass-market subscriber base. But the Zenith TV differs in two significant ways: it's an integrated unit with built-in Web browsing and the interactive service is free.

The consumer-electronics maker will sell a 27-inch TV capable of browsing the Internet and running walled-garden applications starting in the second quarter of next year, Zenith vice president John Taylor said. The model will feature a flatter picture tube, an imbedded 56 kilobit-per-second dialup modem and a mobile, infrared keyboard, he said.

The set will sell for about $600, an approximate $100 markup over comparable non-interactive models, said Taylor.

Included in that price is free Internet service from Transcast, a provider of co-branded Internet portals and access services. The Zenith box will use Wind River's "VxWorx" operating system, run OpenTV Inc.'s "Spyglass" Web browser and feature Trancast walled-garden content such as syndicated news, sports and weather feeds.

"Our research shows a growing number of consumers that enjoy channel surfing and Web surfing simultaneously," said Taylor. The ITV set is designed as an easy, entry-level means of obtaining Internet access via the TV with little or no setup.

The Zenith set will have picture-in-picture capability and allow users to push a button on the keyboard to toggle between Web browsing and TV viewing.

Telecruz's "TC702" chipset will drive interactive applications on the Zenith box. The TC702 uses a reduced-instruction-set computer processor, graphics coprocessor, programmable vertical-blanking interval splicers and support for two VBI channels, as well as 16-bit stereo audio support and a "flicker filter" for graphics and text.

"This product is really a transitional product," Zenith vice president of research and technology Richard M. Lewis said, noting that broadband and digital versions of the TV are under consideration.

Although the TC702 chipset supports Wink Communications Inc. interactive elements and Advanced Television Enhancement Forum (ATVEF) content, "as of now, they're not integrated into the platform," said Telecruz chairman Kris Narayan.

Transcast's caching technology is intended to ease the delivery of content through the narrowband connection.

Future versions of Telecruz's chipset will include a faster processor and support for cable modems and digital subscriber line technology.

The Zenith ITV set is Telecruz's first U.S. win. To date, the company has focused on selling its integrated TV silicon to the Asian and South American markets, particularly China, India and Brazil. Its biggest customer is India's Videocon.

Narayan said TCL in China will launch a product next month.

Telecruz has also inked a deal with a "major Japanese manufacturer" of TVs, which will be announced in about one month.

Narayan's interactive-TV strategy is based on the premise that "there is no more room in the living room for a set-top box," as home entertainment centers brimming with VCRs, set-top boxes, DVD players and TVs. Thus, Narayan said, an easy-to-use, integrated TV unit is the key to achieving success in the ITV market.

Narayan sees a strong market for the concept in the Third World, where many families are eager to obtain Internet access.

The integrated TV is a means to bring mass-market appeal to ITV, Narayan said, citing a $50 to $60 "bill of materials." The free-service model will add to the unit's attractiveness, he added.

Transcast co-founder and vice president Ramon Cazares said his company will sell banner advertising on its portal, and will offer Zenith a marketing platform to ease product registration and cross-sell other Zenith products. Users will also receive sales solicitations via electronic mail.

Although other free Internet-service providers have seen their networks overtaxed by heavy users, Cazares doesn't expect his users to be online all the time.

The service is not meant to replace PC-based Web browsing, he added, but designed to compliment the "lean-back" entertainment experience of the living room.

Thomson Multimedia also recently announced a line of TVs that incorporate Microsoft TV software for a service rollout in France and later Germany. The service, TAK-a Thomson subsidiary in which Microsoft holds a 30 percent stake-is subscription-free. The service is targeted to analog terrestrial European users.

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