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The November 14, 2001 Issue Provided by System Dynamics Inc.
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Fulfilling the Vision of the Broadband Home -- A Visit with Ucentric Systems

We recently visited Ucentric Systems, one of the most ambitious companies in home networking. It's based in the old mill buildings in Maynard, Massachusetts, and Dave couldn't help recalling his many visits to Digital Equipment which converted these buildings from wool to bits. We met with Allen Frechter (VP Business Development), Patrick Donovan (Director, Business Development), Tim Collins (Director, Product Management) and Amy Thompson (Manager of MarCom).

Ucentric sees the need for a "whole-home converged services" system: a common platform addressing all the family's networking needs for communications and entertainment. This includes the full range of services -- data, voice, audio and video -- and all of the current and future devices appropriate to those services. Thus their vision of home networking includes multiple PCs surfing the Web - but also multiple TVs using a common "personal video recorder" (PVR); audio and video available on demand at any stereo or TV in the home; telephones with advanced features; caller ID appearing on any TV set or PC; and voicemail and email messages available on any screen in or outside the house.

Readers of this report will know that we share this vision, but have viewed solutions as some years away. Ucentric is working to make it a reality in the near term - they're already running trials with several cable operators, and a trial with Sears is about to get under way.

While most companies in the home networking business are hardware vendors, Ucentric believes that software is the key to success. They've created a comprehensive suite of underlying software and a set of reference hardware designs, and are now working to licence their software to many kinds of hardware vendors -- traditional cable vendors, consumer electronics, and PC makers. With their underlying software running on many vendors' hardware, Ucentric will provide a growing suite of applications to address more and more of the user's needs - a strategy similar to that of a well-known company in Redmond.

Ucentric's chartware looks like that of many others who share the vision of the "broadband home." The difference is in the demo - and most of their promises are already fulfilled in the version we saw, which they said was identical to the version now running in their ongoing field trial with Rogers Cable. The demo included PVR functions with simultaneous recording and viewing; viewing and controlling the PVR from multiple TVs; caller ID and call message logs overlaid on the TV screen; viewing email on the TV; and good integration of the PC and TV functions with a common user interface.

Like other "home media servers" (such as the recently released SONICblue ReplayTV 4000), the Ucentric system acts as a central server for audio and video content. It can store TV programs and audio content on its hard disk and send it to any device in the house - over cable to the TVs, and over the air to the stereo systems.

What impressed us most was the integration with the PC. Since the majority of North American homes have PCs, and already use them as the primary platform for email, we've been dismayed that most "interactive TV" systems treat the TV and PC as completely separate domains; more than anything, the lack of email integration has kept us from using our WebTV unit for anything but occasional web browsing. The Ucentric system has a common email repository that can be accessed by any device in the house, and will support many flavors of networking to communicate with PCs -- Ethernet, wireless and phoneline today, powerline in the future.

The Ucentric system can best be viewed as an integrated system incorporating both server and client functionality. The server keeps track of the data - video and audio media, email, phone calls. The TV client -- running on the same hardware -- provides a user interface for TV sets. On the PC, no special client software is required: the Ucentric server runs with the Web browser, instant messaging and other client software the user has already installed and is comfortable with.

While Ucentric talks about distributing their software through multiple channels, their primary approach seems to be the broadband service providers. They'd like to see cable operators distribute systems with Ucentric software in the same way cable set-top boxes are distributed in North America -- purchased in bulk by the cable operator and leased to the customer at a low monthly fee. This way, the up-front capital cost is borne by the cable operator rather than the end user, making it much easier to build a mass market.

We're frankly skeptical of this approach. We've never perceived cable operators as willing to spend sufficient capital to equip advanced boxes with the functionality required to fulfill most user's needs, and we have not seen them willing to offer a choice of boxes with different feature sets to address different customer needs. We believe that the North American satellite model -- the user purchases the set-top and can select the brand and model which provides the desired features at the price he or she is willing to pay -- would make more sense. Perhaps it's time for cable operators to embrace this approach too.

We applaud Ucentric for doing a great job in focusing on user needs (we're told that the "U" stands for user) and we wish them luck in moving from trials to full deployment. If they can show that users and service providers are ready to address the full vision of the "broadband home" now rather than waiting, we expect that many other companies will enter this market.

Meanwhile, we sure wish we had one of these in our house. It comes closer than anything else we've seen to addressing our needs.

( www.ucentric.com )