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Home entertainment revolutionary
By DAVE GUSSOW
Perlman, the co-founder of WebTV, spent the past couple of years working hush-hush at a company he called Rearden Steel Technologies. Last month, he dropped the old-economy cover name, renamed his company Moxi Digital Inc. (www.moxi.com) and showed off his vision: a box called the Moxi Media Center. That box, Perlman explains, will be the control center for a home's entertainment: TV through satellite or cable connections, the Internet, a DVD and CD player and a digital jukebox storing music on a hard drive.
Perlman preaches simplicity and ease of use as a must for home entertainment gadgets, saying consumers have been overwhelmed by gadgets and wires. While other companies are expected to come out with all-in-one entertainment boxes, Perlman's Moxi has gotten the most attention, and he has become the season's most talked-about visionary among technology enthusiasts. First, his device is interesting. Second, he sold WebTV to Microsoft for a reported $500-million and isn't shy about criticizing the software giant for fumbling that technology. Third, he will be competing with Microsoft, which he left in 1999 and which is also pushing its ideas for home entertainment.
* * * Q: What was your initial vision for what you thought WebTV was going to be or should have been? Perlman: What we saw was that if we want to start interactive television, first we needed to get some content on the TV before we could begin to create (an) interactive television standard. And, of course, there wouldn't be any content till there's a standard out there. So we said, let's break the chicken and egg here by using a whole bunch of content that was out there for the PC, Web content, and make it work on a television. And we always knew that would be a good bootstrap but not an end in itself. We thought that there was a segment to the population that would benefit from the Web on TV, mainly people that were not comfortable using personal computers. But we always viewed that we needed to get to interactive media instead of just being limited to interactive Web pages. And of course we did that. We created the first personal video recorder. That was the next step in what we were doing and then, of course, we were thinking of going beyond that. But as it turns out, it was not consistent with Microsoft's agenda at the time, and so that's why I left. * * * Q: Did the combination of PC and television work? Perlman: WebTV was never supposed to combine the PC and the television. It was supposed to combine the Web and the television. And it worked for a segment of the population that was not comfortable using the personal computer, largely older people, people that did not grow up with computers. And for that, people still use it and I think it's about 1-million Americans are currently getting their e-mail on their television through WebTV, and that's great. It's wonderful to see how it has changed people's lives. But people are primarily interested not in the Web on the TV; they're interested in having control of the media that they want on the TV. * * * Q: And that's where Moxi comes in? Perlman: That's where Moxi comes in, exactly. * * * Q:. Going back to the '70s with the Qube experiment in Columbus, Ohio, interactive TV never really caught on. What makes you think it might catch on now? Perlman: Because it actually has caught on. Let me give you examples of that. If anybody puts a DVD into a DVD player, in addition to the movie, you have some interactive part that starts it. You know, see the director's commentary that goes along with the show, you can see the making of, you can find out information about the stars, there might be a game associated with it, and so on. So DVD players have sold tens of millions of units. They've been a phenomenal success. And that is interactive television. Do you want to know what it looks like? That's what it looks like. (Laughs) The whole world seems to have not noticed that this happened, that there was a big success, an interactive TV success, but there it is. There's other kinds of interactivity that have also had strong success. PVR (personal video recorders), the kind of capabilities that you get from TiVo, Replay TV, Ultimate TV and Dish player. That has also been a success in the sense that the people that use it are extremely happy with it. You talk to somebody who has a TiVo and ask them if they'd ever give it up, they'll tell you, "No way." They're very, very high rates of satisfaction. Up till now, these devices have been fairly expensive and they've been very difficult to hook up, so they haven't actually been that much of a commercial success, not nearly as well as DVD. But they nonetheless have been very successful in that people are very satisfied with them. * * * Q: Some Microsoft executives have suggested that they've been trying to do the same thing that Moxi's trying to do and they don't think that Steve Perlman is going to be able to pull this off any better than they've been able to pull it off. What do you say when you have a competitor such as Microsoft breathing fire at you? Perlman: (Laughs) Well, Microsoft's Waterloo really has been broadband. It's true that they have not succeeded there, but you have to understand that after the initial WebTV product, which, you know, you look at the 1-million subscribers out there and you say, "Oh, my God, that's not very good." Well, hey, that's their big success story when it comes to television products right now. MS-TV, which is what they did to carry their operating systems and so forth into cable operations, has not succeeded anywhere in the world. Ultimate TV has not succeeded either. In fact, they just laid off the team. So I think that you have to realize that the products that I did for them sold pretty well. They were moving, and we were evolving them. If they had let me keep evolving them, I think we would have kept on doing pretty well. But after I left, the focus was no longer about adding features or making it better for the customer, keeping up with trends and so forth. The focus was, "Let's make sure it runs Windows CE so that people get locked into our operating system monopoly." And at that point, of course, it no longer was a customer-focused effort and none of the products sold. * * * Q: Do you think the public is ready and wants something like Moxi? Perlman: There are parts of Moxi that it's easy to say they want because they already are using it. People are already using DVDs, they're already playing CDs, okay? They're already using PVRs and happy with them. They're already using satellite and cable TV tuners. So providing people with a nice product that does those things -- it's convenient, has one remote control and simplifies things and is available throughout their house -- it's kind of hard to say why they wouldn't want that. And when it comes to the more esoteric features that are new, "Well, okay, I go into my music jukebox and not only does it show me Madonna's music but it also takes me to a movie that she was in." Or getting an instant message to pop up while I'm watching a DVD or something. Those kinds of features, it's unknown whether people are going to be interested in those things or not. But I think that the product is inexpensive enough and it's easy enough and fun enough to use that people are going to want it for the things that we already know that they want it for. And then we'll find out what they think of the new stuff. * * * Q: You're talking about a public that's taken more than 25 years and still can't program VCRs. Perlman: Exactly. And you're talking about a consumer electronics industry that still makes products that require you to know how to program something like a VCR. What we do is distill out all of the complexity. If there was any complexity, if there's any driver that had to be loaded, any Wizard you had to go through, if the thing inexplicably stopped and you had to go call up somebody who's very knowledgeable about it to fix it, if you had to go through a very complex wiring job and run wires all along your walls for the speakers and so forth, people would not do any of those things, except for geeks like you and me, right? I have this experience in my home right now, almost all those things. My house works that way. But instead of costing $1,000, it costs $1-million. And instead of it being a lack of aggravation, you know what? It's a major development project for me. I only do it because I know how to design all this stuff. * * * Q: Microsoft came out with a couple of prototypes at the Consumer Electronics Show that are in the entertainment area. Have you had time to think about what they're doing and how that may compete with what you're doing? Perlman: It's hard to comment in detail because basically what they're showing is prototypes, whereas we're showing a product. But at the same time, there are certain general things you could say about PCs vs. dedicated systems when it comes to home entertainment. The wonderful thing about PCs is the exact reason why they're not very well suited as entertainment devices. They are mentally flexible devices. You can load anything into them, you can add any hardware, you can do all sorts of things. Unfortunately, though, they don't work very reliably. When I'm using Microsoft Outlook and I'm also using Windows Media Player to listen to music, when an e-mail comes in, the music stops for a second and then starts playing again because Outlook goes and takes over the processing resources and starves Media Player, so it slows down for a moment. If I'm watching the Super Bowl and it's the last 15 seconds of the game and the guy's kicking a field goal and suddenly the TV stops because my son just received an instant message, that's not good. But unfortunately, Windows is designed to try to please everybody and, therefore, it's not very good at any one thing. * * * Q: A lot of your partners would be considered archrivals of Microsoft, everything from the Linux operating system to AOL Time Warner. Is that by design? Perlman: No, we didn't choose Linux because it was a competitor to Windows. Frankly, Windows is more available. There's more software available for it and so on. If Windows were capable of doing what we set out to do here, we would have used it. There's no political issue there. We used Linux because we needed a system that the source code was available. It's an open system. As far as the people we're partnering with, it has turned out that Microsoft has not been successful in the broadband area, so that the partners we have tend to be rivals of Microsoft. But, for example, Vulcan Ventures has Paul Allen at its head, and Paul is a co-founder of Microsoft. He has very close ties. He's got a huge amount, well, all of his wealth comes from Microsoft stock. So I don't think that all of our partners are anti-Microsoft, although AOL, I think, has at times had words. (Laughs) * * * Q: You're promising ease of use, you're promising one remote, you're promising that people will understand it. Will your user's manual be in English so people can understand it, too? Perlman: Our user manual is not going to be in paper. There will be some brief instructions on hooking it up and so forth, but the user's manual will be largely in the form of little infomercials. They'll be in video on the hard disk that'll explain the different things you need to be explained. And you know how you have the little question mark come up in the user interface on Windows or Macintosh when you need to know? There'll be little things like that and when you click on them, wherever you are, you actually get a little helpful video demonstration of what it is you need to understand. So it'll not only be in English, but it'll be in spoken English with action (Laughs). - The transcript was prepared by Times editorial assistant Barbara Moch. Dave Gussow can be reached at gussow@sptimes.com or (727) 445-4228.
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