[itvt] Interview: Kenneth Lowe, VP of Business Development and Strategic Marketing, Sigma Designs

[itvt] Interview: Kenneth Lowe, VP of Business Development and Strategic Marketing, Sigma Designs

13, a Microsoft representative addressed those criticisms and argued the merits of that company's IPTV platform.)
[itvt]: Could you give us an overview of what Sigma Designs does?
Lowe: Sigma Designs provides media processors for consumer entertainment products of various types.

Essentially, the primary direction that we've had over the last three years is to follow the home-entertainment evolution to high-definition. As it's moved to high-definition, it's become more and more centered on using the kind of silicon solutions that Sigma provides, which include all the new high-compression codecs for greater bandwidth efficiency.
At this point in time, what we provide is essentially a system-on-a-chip that will perform almost the entire set of logic functions inside of an IPTV set-top box, a high-definition DVD player, a media center extender product, or a television set.

Essentially, our chip--plus memory--are the predominant elements of these platforms.
Early on, because we were an upstart company in this space, we were relegated to focusing on penetrating markets that were under the radar of the larger, established competitors. When we entered the IPTV space five years ago, we were a pioneer in this market.

We were bringing streaming video to small carriers that were at the bleeding edge. We were working with a cottage industry of software companies that were doing middleware and providing solutions--primarily using Linux.
Similarly, we had some early experience in what you might call the enthusiast area of high-definition connected DVD players.

We're now the dominant vendor in this space, with six of the major Blu-ray players based on our chip.
As I mentioned, our chips are also used for digital media adapters--these wireless media center-extender products that allow photos, video and music that's stored on a media center to be distributed throughout the home. Finally, we are also inside some of the new, major integrated digital televisions coming out.

These include televisions by LG, Sharp, HP, Sampo, Sony and a number of other companies.
So we are in a number of major consumer segments. However, to date, our most significant penetration--and our main driver of revenue today--is the IPTV set-top box segment.

Because we've pioneered this space, our chips are inside more than 75% of the installed IPTV set-top boxes in the world today. So IPTV is our major segment, and that is where we've planted our flag, in the broadest sense. I would echo the sentiments of Microsoft, that IPTV has extensive capabilities and is set to become a prolific service throughout the world--I actually think Microsoft has done a lot to catalyze this area, by the way.

[itvt]: How do you think Microsoft has catalyzed the IPTV space? You were in this space before Microsoft entered it, correct?
Lowe: Prior to Microsoft entering the space two-and-a-half years ago, we had been working with a number of set-top box suppliers and telcos that were using Linux.

But when Microsoft entered the space, they catalyzed it first of all because they succeeded in attracting the largest carriers to their solution, and secondly because this, in turn, very quickly propelled many of the other carriers into rolling out an alternative solution. And those carriers knew that if they weren't going to go with Microsoft, they had better get busy and roll out a solution based on Linux set-top boxes.
Now all this benefited Sigma in two ways: we had the quintessential silicon that powers these boxes, and so we were able to take advantage of the burgeoning market for Linux-based solutions; and, at the same time, we were working with Microsoft to develop the platform that they eventually deployed for their offering.

So, as a result of all this, we are currently delivering IPTV solutions on all continents. In Europe, for example, we're delivering to telcos like Free--which is actually the largest deployment to date that we've been involved in--and Neuf in France. Our solutions are also being trialed by AOL France.

And in Asia, our solutions are being used by China Telecom, China Netcom, and by Gyao in Korea. We also recently announced a deployment with Usen in Japan. And, in addition to all that, of course, our solutions are being delivered, as part of the Microsoft TV platform, to all the telcos that Microsoft has secured to date.

[itvt]: Just to clarify: Microsoft is also working with other providers, correct?
Lowe: Actually, no. In your recent interview with him, Microsoft's Ed Graczyk said something that might have accidentally misled people: he said that everybody's been moving to SoC technology from chipmakers like Sigma and STMicro.

In fact, today the only chip that's offered under the Microsoft TV platform is the Sigma Designs chip. Every single set-top vendor that Microsoft is working with, and every single telco they've announced, is using the Sigma Designs chipset.
[itvt]: But didn't they issue a press release last year that mentioned several SoC vendors?

What happened to those other vendors?
Lowe: The other vendors apparently aren't ready yet.
[itvt]: Why is that?

Lowe: It is extremely challenging to develop, integrate and produce a 4.5-million-gate chip that pulls together all the video, audio, graphics, security, peripherals and memory control that have to happen inside of the set-top box to enable a multistream live-TV experience. This is an extremely complex chip.

It has a large number of subsystems. It has a multiprocessor environment. It is first of all an enormous effort on a chip level, and then the software integration effort is equally enormous.

These systems are simply very complex pieces of hardware and software. It takes a lot of time to make the chip itself work, and then it also takes a lot of time to make the entire system work.
[itvt]: How was the integration work with IPTV Edition carried out?

Lowe: We worked together with Microsoft. We have a joint group of people that works together on the integration effort--and this is actually an ongoing process.
As you know, when Microsoft moved from an all-software platform to a SoC-based platform using our silicon, it was a big paradigm shift.

It required their software to adapt from a paradigm where everything runs on a big Pentium processor to a paradigm where a little software runs on a smaller processor and then a bunch of hardware subsystems perform each individual task. So this is a big shift in code, and we've been working together to make this transition as seamless as possible.
[itvt]: Now you support multiple video codecs, correct?

Lowe: Yes, we have products being deployed that use the MPEG-2, H.264 and VC-1 codecs to deliver high-definition video. It just depends on the infrastructure of the service provider, and the type of content that they want to provide.

It's very important for set-top box vendors to ensure that their products use chips like ours that can support every one of the different codecs, because operators obviously do change their strategies and upgrade from one codec to another, and many operators around the world are currently planning to upgrade to more advanced codecs.
[itvt]: How many units do you have in the field right now?
Lowe: Thanks for asking that, as this is a point I'd like to emphasize, in order to allay any misunderstandings stemming from your recent interview with Ed.

As I recall, you asked him about the relative size of Microsoft TV's cable and IPTV deployments. And, even though Microsoft has been an enormous force in moving IPTV forward by securing all these large telcos for their solution, the actual number of deployments of their IPTV solution is still relatively small. Which, of course, was what Ed stated in his answer to you.

However, I'd like to stress that Sigma's IPTV deployments are currently much larger than Microsoft's, as we've been in this business a lot longer and we work with multiple companies: in our fourth quarter alone, which actually ended at the end of January, we shipped over a million units in IPTV set-top boxes.
[itvt]: What percentage of those shipments will be supporting HDTV?
Lowe: I would say that around 80% will be for HDTV.

[itvt]: Are most of your shipments currently to Europe?
Lowe: Predominantly to Europe and Asia at this point.
[itvt]: What are your thoughts about the US IPTV market?

Certainly, AT T seems to have been rolling out IPTV more slowly than many of us anticipated…
Lowe: I think IPTV will be very successful in the American market. I think that one of the reasons its deployment has been comparatively slow here, compared to Europe and Asia, is that those markets do not generally have the established cable and satellite infrastructure and offerings that we have here in the US. What this means is two things: firstly, carriers in Europe and Asia that are looking to roll out IPTV have a waiting market; and secondly, they have a lower bar to jump over in order to offer a compelling service that is much better than the alternatives.

However, if you want to launch a new video service in the US, in order for it to be compelling enough for consumers to subscribe to it, it has to provide features that are over and above what consumers can already get from their cable or satellite operator.
Now, the AT T offering does exactly that. But, for exactly that reason, it's taken a little bit longer to get that entire solution perfected, implemented and ready for deployment.

So I think the fact that IPTV offerings for the US market have to be very feature-rich at launch, in order to gain traction against cable and satellite, and that it therefore takes longer to develop and deploy them, has led to a perception that IPTV is not going to be as successful here as in other markets. I don't think that will be the case. In fact, I think that as we get to the second half of this year, deployments will accelerate significantly in the US market.

Now, it's certainly the case that the roll-out of Microsoft TV-based IPTV services has taken longer than people expected. But, at the same time, I would say that, by-and-large, the Microsoft TV solution offers the most premium IPTV experience--the most integrated, interactive IPTV experience--you can get today. And I think that's one of the reasons its deployment has taken a little longer.

Remember that they're offering premium features that aren't available elsewhere: instant channel-changing, for example, isn't offered by anyone else; and the whole-home PVR that they've implemented wasn't available before they launched it--though other companies are now starting to offer similar kinds of capabilities.
So they're offering a lot of features that are differentiators; but not only does it take longer to develop a rich feature set like that, it also takes longer to test this wider range of functionality. So, in order to ensure that the solution is solid once it's deployed, there's a huge amount of testing being done at Microsoft's facility in Mountain View.

And we, of course, have been working very closely with them to support that effort.
[itvt]: From an interactive TV perspective, how future-proof are your chips? What kinds of services can they support that aren't currently deployed?

Lowe: Well, one feature that we've demonstrated for a while, but that has still not been deployed by Microsoft or any other IPTV provider for that matter, is multichannel viewing capability. Our chips provide a hardware platform through which we can decode a number of SD streams equivalent to two HD streams, and put them on the screen at the same time--with each stream delivering an individual channel. The applications for this capability are numerous: one of them would be a mosaic mode that would allow you to view simultaneously the nine--or even sixteen--channels that you most like to watch.

In other words, it would provide you with an instant browsing mode that would let you keep track of everything that's going on on your favorite channels. Another application for this capability would be sports. In the future, you'll be able to watch each game from multiple viewing angles, or to watch multiple different games at the same time.

[itvt]: Now, multiscreen mosaics have been offered by satellite providers for some time, though…
Lowe: Yes. But first of all, it takes up a lot of bandwidth for them to be able to do this. Secondly, those are pre-configured mosaics--not custom mosaics where these channels are all being piped into your home through multicast and you are assembling them in whatever way you want.

With satellite, what you have are pre-built mosaics that are being transmitted on one channel. Satellite can't do multichannel mosaics without using a tuner for each channel.
[itvt]: And, just to clarify, your chips support custom mosaic generation by the viewer, correct, not just by the operator?

Lowe: Yes. By either the viewer or by the operator. So, for example, if you wanted to keep track of what's going on on all the news channels, you could do that.

Or if you wanted to look at the 10 channels you've watched most recently, you could do that too. This capability could be used in all manner of ways.
[itvt]: Now, none of your customers is using this capability right now…
Lowe: Not yet.

But essentially our chip provided this capability--at least in theory--two years ago. It then took a little bit more than a year to develop all the software that was required to make this capability demonstrable. And I should caution that we are still not at a stage where the final production software is in place, along with network support and all the other things needed to make this capability a deployable reality.

Some of these features do take time to roll out. The underlying technology may be there, but there's a great deal of infrastructure that has to come along as well.
[itvt]: Can the viewer customize the appearance of these mosaics--for example, by having one larger video window and multiple thumbnails?

Lowe: Yes. You can configure it more or less any way you want. It's very flexible.

Essentially, what we're providing you with are decoding engines that can be split up into as many streams as you like, which then aggregate to the total bandwidth of each decoding engine. In addition, it works with any selection of codecs. So you could have various channels, each using either MPEG-2, VC-1 or MPEG-4, all being displayed at the same time.

[itvt]: So, presumably, you could have streams from the Internet next to regular channel streams?
Lowe: Exactly. There are various different types of service combinations and multipurpose products currently being explored by the industry.

I think you'll find that, with most of the major consumer electronics companies, there is a vast amount of convergence going on. So what you're seeing are more and more classes of consumer products that provide multi-functional capabilities, that are connected, and that enable you to tap into content that's stored and transmitted to them from various different places. Look at Sony's Locationfree TV's, for example, which allow you to play back remotely content that you have on your PC.

The world is definitely going to see a lot more convergence in the consumer space.