From the October 2007 issue of Entrepreneur

 

So far, my TV's set-top box hasn't done much for me except take up a lot of space and serve as a glaring reminder that it's time to dust. Oh yeah, it also unscrambles cable signals on my TV and serves channels to my remote--so much hardware to accomplish so little, so poorly. But there are big changes ahead for set-tops--and the TVs they serve.

 

See, the problem with TV is that it isn't connected to the internet, even though most of us get broadband over the same cable that brings us moving pictures. TV programs regularly send you to their websites, so why not just display them in a window on your TV? That's exactly what nearly two-thirds of respondents to a recent iSuppli survey asked for: "to view content on their TVs that originated from outside the 'walled garden' of their pay-TV services."

 

PC/TV convergence is coming, and recently liberated set-tops will help take us there--but not dumb set-tops like mine. They'll be replaced by spiffy, new multifunction digital video recorders--you know, TiVos--as well as Xboxes, Slingboxes and DVR-capable PCs. iSuppli says sales of this stuff will double to more than 700 million units a year in 2011.

 

We're at an inflection point, partially sparked by the end of cable's decade-long court battle to prevent third-party hardware and content providers from playing in its garden. What's at stake, explains Kurt Scherf, vice president and principal analyst for Parks Associates, is control of things like video-on-demand and yet-unborn productivity and entertainment services.

 

Climbing the Wall
Among the first to exploit the new environment is DVR market-maker TiVo, whose new TiVo HD accepts content directly from web providers like Amazon.com, CNET and Yahoo! without a PC intermediary. Competitor Digeo is about to release a new Moxi HD DVR with similar links to websites and a commercial browser. Microsoft plans the holiday release of an IPTV-capable Xbox 360, a PC and TV go-between. Some 7 million Xbox subscribers to Microsoft's Live web service will be able to message each other, swap files and download web content, all while watching TV.

 

Packed with onboard smarts, big hard drives and an array of Ethernet, USB and other ports, these DVRs are much closer to PCs than set-tops and will link to your Wi-Fi network. Microsoft already sells a series of wired and wireless keyboards and mice designed for both Xboxes and Media Center PCs.

 

And if a full-length Hollywood release can stream through a DVR, why not a videoconference, PowerPoint presentation, large PDF or Microsoft Office file? Wouldn't you rather update your website or ponder a map mashup on a nice, big 1080p HDTV?

 

That bridge is still far off, says Digeo CEO Mike Fidler. Besides having many compatibility issues to work out for a platform without a common programming environment, TVs have much higher standards to meet than PCs do. TiVo vice president Jim Denney agrees that TV viewers won't tolerate the same hiccups they do on PCs. So DVR-makers are easing into web connectivity to preserve digital rights, security and the overall experience.

 

But history shows that if it can be done, it's only a matter of time before it will be done--especially in an era when web-based files and applications can be tapped from anywhere. Netsuite and Google Apps on TV? Some day.