With several success stories under its belt, Oregan Networks expects DLNA certification, Viiv PCs and CEA-2014 ratification to soon bring some level of standardization to the digital home entertainment market. This should be good news for the company that is providing the software to enable an interactive TV-centric environment on a variety of devices. DigiTimes.com asked Oregan's marketing VP Milya Timergaleyeva about recent developments and how the company sees its market moving forward.
This is part two of a two-part interview, part one was published on Thursday, March 23.
Q: Can you tell us how your sales break down globally? The customers detailed on your website indicate you have more success in Europe and Japan than in the US, is this true? If it is, why?
A: Japan and Europe have been leading the world in embracing broadband and interactive television and hence became our focus. The majority of our sales today are in EMEA. Based on the projections of our Japanese customers, we expect volumes in the multiple millions by the end of 2008, covering primarily the large metropolitan areas, including Tokyo. Our deployments in the US represent the smaller part of the pie. A retail debut of Oregan-powered hybrid Digital Video Recorders with home networking functionalities is planned for March. We are also in discussions with a number of Fortune 500 companies within the telco segment.
Q: How important is Taiwan to your business?
A: Taiwan for the world is the forge of CE and CPE hardware, offering an optimal combination of economies of scale and increasing engineering expertise. We work closely with our ODM partners in Taiwan to deliver “near turn-key” devices as well as fully head-end integrated solutions.
Q: Your list of chipset vendors is mainly US-based, with a couple from Japan and Europe. How closely do you work with the chipset and processor vendors? Are you working with any Taiwan-based IC design houses?
A: In 2002-2003, we worked with ALi (Acer Lab Incorporated) – a Taiwan-based chipset design house. Unfortunately, despite the very advanced specifications of the product combined with the price competitiveness – the outcome of this collaboration was unproductive.
In January 2005, we discovered that the silicon had to be withdrawn from the market. In 2005, we licensed our solution to another Taiwan-based silicon vendor who plans to build portable entertainment devices powered by Oregan’s solution.
Q: You indicate that Taiwan's Mitac and ZyXel are contract manufacturers within your business ecosystem, are they producing products for your other customers, or are you working directly with them on products of their own?
A: A concrete device project is always customer-driven. As part of the process, we provide engineering and customization consultancy to ODMs, like Zyxel and Mitac, in creating customized and differentiated products to fit our mutual customer’s requirements.
Q: What types of products are they producing with your solutions? They both attended the CES Show in Las Vegas, were they showing products that use your solutions?
A: Mitac was demonstrating hybrid devices with Ethernet and wireless a/b/g connectivity in a Network DVD and Digital Media Adaptor form factors.
Q: What other companies were at CES exhibiting products that utilize your solutions?
A: One of our key silicon partners Sigma Designs was demonstrating reference designs for streaming of WMV9/VC-1 and H-126/AVC over broadband and home networks. These combo reference designs are targeted at convergent Telco and CE market. Texas Instruments (TI) was showing an STB reference design. Digital Living Network Alliance had a demo of our NetDVD.
Q: How many years have you been exhibiting products at the CES Show in Las Vegas? How important is the show to your business development? Do you exhibit at any other shows, in particular in Asia?
A: We have been exhibiting at CES for six consecutive years. It is a fundamental event in our global business development efforts as well as building the brand. An equivalent of CES in Asia for us is Computex, during which we exhibit regularly. We are planning to demonstrate a new HDTV platform at this year’s Computex.
Q: Within your existing solutions, did you show any new functionality at CES?
A: This year we were demonstrating two new features. First of all, the CinemaNow direct-to-device service delivery framework, which utilizes our new development – a set of server-side XML applications and business logic in conjunction with the client-based all-in-one Oregan Media Browser, which is a web browser, media player and Windows DRM 10 combined. Through Oregan’s framework of service delivery, CinemaNow can now be received directly on the consumer electronic devices, bypassing the PC.
Secondly, Oregan announced the roadmap for compliance with CEA-2014, the new Consumer Electronics Association standard launched at CES 2006. The standard is spearheaded by the prominent CE brands Philips and Samsung and specifies the mechanisms for interoperable delivery of web-based services to devices, utilizing proven industry standards: HTML and UPnP.
Q: What types of customers did you meet at CES?
A: We had productive exchanges with both telcos and global consumer electronics brands.
Q: When could we expect to see products in the market that have resulted from discussions at CES? That is, how long is the development cycle for products that your solutions enable?
A: Each project length depends on the requirements of the customer and the nature of the product. Delivery of video on demand services is typically a multi-vendor project, involving several stages of bidding, integration and trials. These products can take up to three years to get to mass market.
On the other hand, an average full CE product development cycle is about nine months, with total of 12-15 months timeframe to reach the end consumer. This involves negotiations, selection and integration of hardware components and third party technologies, certification, production, retail marketing and deployment. In cases, where our customers make minimal adjustments to the original reference design, the time-to-market can be shortened to the six months production window following the QA.
We plan to have demonstrations of web-enabled DVRs, mobile devices and LCD TVs at the next CES.
Q: What is Oregan currently developing and do you expect to have any major launches in 2006?
A: Oregan has undergone its major technology development curve in the past 2 years. In 2006, we expect the standardization to start happening with DLNA product certification launch and retail availability, Viiv PCs retail launch, CEA-2014 ratification.
I believe that we have created the Internet connectivity technology that is universal in its application throughout device classes and content delivery models. We were pleased to see at CES that Oregan’s approach is gaining significant traction, reverberating through the ranks of the internet economy: search engines, portals, book sellers and auctions have recognized the market potential and embarked on new strategies for selling targeted content and entertainment in an interactive TV-centric environment.
In the year 2006, Oregan will work on several bespoke name brand products, customizing its core solution to meet our customers’ need for differentiation in functionality and consumer experience.
We are also planning to launch the next generation of Oregan’s clean-room implementation of Macromedia Flash engine, taking it to version 7.
Q: You were contracted by Sony Computer Entertainment Europe to provide your Internet and Media browser for the PlayStation 2. Are you providing similar functionality for the PlayStation 3?
A: We cannot comment on the future plans of Sony.
Q: Your PS2 contract was for consoles sold outside the US and Japan. Why did they not use your solution for the global market?
A: As a large corporation, Sony had different regional strategies for enabling access to online features.
Q: Do you have any major Korean customers? Can you name them and tell us about the products they produce with your solutions?
A: In Korea, we are working with Celrun, a leading STB manufacturer who provides its solutions to Maginet, KT and SK Telecom.
Q: How important are content providers to your business model? Do you have any exclusive partnerships or other types of special relationships that give you a significant competitive edge in this area?
A: Content services are the raison d’etre of Oregan’s technology. In a sense, Oregan is developing the connected devices market, acting as a match-maker, bringing the content providers like CinemaNow – together with device brands and manufacturers.
Q: Can you tell us how your sales break down in terms of devices? Over the last eight years, can you identify any general trends in adoption for different devices?
A: STBs represent approximately 23% of total sales over eight years. The rest is in gaming consoles.
We think that this represents the trend in adoption of technologies to date. As we know today, home connectivity devices have seen limited success, which we envisage will gradually change through introduction of the home connectivity feature within the hybrid media devices. Based on available statistics, dual mode cell phones and IP-connected smart devices have the greatest prospects for high growth in the coming years, followed by gaming consoles and network-connected PVRs.
Q: Do you work closely with OS providers, such as Wind River? You mention support for a variety of systems, are they all equally simple to implement?
A: We generally work with the chipset vendors who, in turn, have direct relationships with the OS providers. We have a history of working on a variety of operating systems, but we are very much OS agnostic. Embedded Linux has an advantage in being royalty-free and widely supported by the developer’s community. The majority of operating systems utilized by our silicon partners today are Linux based.
Q: Can you say something about the proportion of OS development resources you have assigned to the different systems you support: Linux, µltron, Nucleus, VxWorks, WinCE, Windows XP, RISC OS, µCLinux?
A: Oregan’s software is entirely OS agnostic and therefore there is not a particular focus on any one OS.
Q: Your website does not provide any software downloads. Is it only possible to get Oregan solutions bundled with hardware?
A: Windows PC-based evaluation versions of our software are provided on request to customers and partners, following their signing of an NDA.
Q: How often do you offer updates and how are they handled? Is it possible for consumers to update the software?
A: We provide remote upgrades and updates of our software regularly throughout the product lifecycle. Updates are normally associated with software in development (maturity updates) or field updates for bug fixes – which can be made available to the end consumers through a brand manufacturer or service brand. The client software on the device is connected to an Oregan upgrade server which checks the client for consistency with the latest version during the device boot process. If updates are available, the client automatically connects to the server and downloads the updates via IP.
Upgrades, on the other hand, are available for new features through the same mechanism. Upgrades and updates are delivered as patches as opposed to a complete "wipe-off" and replacement of the current version.
Q: What is the typical license cost for your software in a set-top box? What sort of monthly quantities are you currently seeing and how do you expect to see these grow?
A: Oregan’s pricing model is based on specification and volume and is tailored to individual customer requirements.
Q: Many Taiwan companies are now looking to launch set-top boxes and there are several companies already shipping tens or evens hundreds of thousands of certain models each month. How large do you estimate the set-top box market was in 2005 and how fast will it grow over the next few years?
A: We expect current shipping volumes to grow by 200-300 percent year on year over the next four years.
Q: In addition to the launch of digital broadcasting and legislation pushing adoption globally over the next few years, what other drivers do you see in this market place?
A: The content owners and broadcasters have their different preferred and trusted solutions for protection of premium cable, satellite and terrestrial content. Their realization of the value offered by IP delivery of content and acceptance of alternative Digital Rights Management solutions are the ultimate drivers or inhibitors in adoption of IP-delivered video.
Secondly, exclusive, pre-release movie or special interest content offerings will provide the end user with the right incentive to subscribe to IP-delivered channels.
And thirdly, the telecom carriers are compelled to deliver the “triple play”, as their voice and data service margins are eroding. Delivery of video will also optimize and monetize the bandwidth utilization available on their next generation network infrastructures.
The primary driver for providing web-based entertainment in the CE segment is rapid commoditization and the need to deliver a new class of devices that conceptually and commercially tie with digital content.
This is part two of a two-part interview, part one was published on Thursday, March 23.
Milya Timergaleyeva, VP of marketing, Oregan Networks
Article edited by Stephen Taylor
