Chris Lanier: Stop Ignoring Small OEMs, Microsoft

Chris Lanier’s Blog : Stop Ignoring Small OEMs, Microsoft Well as I reported earlier based on my dinner with Microsoft’s Jim Allchin in order for Vista Media Center PCs to include CableCARD support they will need to be certified as a final OEM product. Central to this certification is what Allchin referred to at our dinner as a “protective path.” At that meeting Jim shared in the frustration of this requirement that is certainly CableLabs mandate and not Microsoft’s. At the meeting Jim pledged that Microsoft would fight clawing and scratching for smaller OEMs to get certified boxes but did suggest that the first CableCARD Vista PCs out would most likely come from the big guys.

Chris has more detail out on the process of getting a final OEM PC approved by CableLabs and as I suggested earlier it is quite an expensive process:

From Chris’ blog:

“UDCP Testing Fees
Verification: $30,000
Practice Run: $20,000
Development Lab Use: $12,000/week or $2,500/day. Additional $1,500 per day for extended hrs (5-10 pm).
Digital Output and Recording Technology Review: $35,000

Digital Certificate and DFAST Licensing Fees
Device Certificates for Host: $20,000 annually; plus $0.07 per certificate
DFAST Patent/Secrets (DFAST): $5,000″

Chris says that Microsoft needs to be more responsive to their smaller OEMs. While I can certainly sympathize with smaller OEMs and can see Chris’ point, at the same time I do not think that it is as simple as that. I have been bitching at Microsoft for the last three years to give us premium HDTV content. I’m sure that no one would rather the most people possible have HDTV cheaply and easily on all PCs than Microsoft. They stand the most to gain by this. Unfortunately the content providers are not as eager for us all to get HDTV content on a PC which is generally much more open than a closed type of box like DirecTV’s HDTV TiVo or a set top box offered by the satellite and cable providers.

Bottom line is this. Hollywood does NOT want their HDTV content on your PC. Although Microsoft has convinced CableLabs at this point that Vista can in fact secure their content, this security is dependent on hardware as well and is why they feel they need a “protective path,” which includes a combination solution of both Vista software and hardware.

The ultimate fear is that someone will crack this software/hardware combo and the next thing you know high def copies of the Sopranos will be floating around BitTorrent. Do you know how much money is made selling Sopranos DVDs. DVDs represent the Holy Grail for Hollywood at the present time. They are already shaking in their boots over the non HDTV content that is floating around BitTorrent. Still though, many people don’t want to bother with BitTorrent because they don’t want to watch a crappy low res version of a great show on their computer. Give them an HD version though and this starts to eat into DVD sales.

As easy and convenient as it might be to blame Microsoft for this one, I do not. I blame Hollywood and CableLabs (really just an extension of Hollywood).

Now I’m not saying that Microsoft does not benefit economically from their DRM. They do. But I don’t think that is what is holding back the certification process. It would be nice to the cost to certify go down for smaller OEMs of course and to the extent that Microsoft can influence CableLabs on this I think this would be a good thing. Keep in mind though, this runs contrary to what Hollywood wants.

Another thing for smaller OEMs to keep in mind too is that CableCARD will not be the only path to HDTV on MCE. As Sean Alexander, from Microsoft, has previously blogged, DirecTV will at an unannounced time begin offering aftermarket HDTV support for Vista machines. Although this might not work for everyone (renters, those who can’t get a satellite signal, etc.) at least it is an option for some. If I were a small OEM I’d definitely be reminding people of the DirecTV concept. Personally, I hope we also see Echostar jump on this bandwagon as I think they have the strongest HDTV lineup at present after acquiring the licensing for some of Voom’s HD Content.

Chris says, “Microsoft needs to realize that they have over 130 PC manufacturers shelling out Media Center PCs and they can’t just give all the features and attention to the big 5.” I do think that Microsoft recognizes this and I do think that Allchin is sincere in his comment about wanting to help smaller OEMs through the process. But for my two cents I blame CableLabs on this one a heck of a lot more than Microsoft.

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  1. Anonymous says:

    You are understating the quality of the content on Bit Torrent. TV shows usually average about 600×360 resolution and they look excellent on my 37″ LCD, often better than the standard def cable feed.

  2. Media Player says:

    Here’s the thing about CableLabs testing the PCs: All the hardware that is likely going to be used is standard hardware based on standard chipsets. It’s not “special” hardware. If true that CableLabs is going to test each OEMs PCs before CableCARDs are allowed, it’s a rather simple formula to create a certified box. If that formula works, why make anyone pay over $100,000 in testing fees when they (CableLabs) already knows the outcome? If it’s using PMP (as it should) you need Vista. Built in is Revocation and Renewal which provide the process of ensuring components are trustworthy. It supports Renewability and needs signed drivers to work correctly. None of this CableLabs would need to certify a machine for, it’s either there and it works or it isn’t and it doesn’t work. 🙂

    I don’t put the blame on Microsoft for CableCARD Testing (however it ends up to turn out), but there are several others things they have done with the platform at limit smaller OEMs (Away Mode, Changers, etc). Even if Jim plans to help (define help? Pay for?) smaller OEMs here, if the set CableLabs fees stay the same for PCs and we pick say 40 OEMs out of the known 130. Microsoft helps pay 50% of the fee making it $75,000 per OEM and Microsoft picking up the other 3 million! In other words, no matter how they help (other than having CableLabs drop the fee), it’s still too much on both sides (I doubt Microsoft is throwing 3 million at this).

    Chris Lanier

  3. Of course the formula is the same, but Cable Labs doesn’t care about certifying a design, that wouldn’t generate them very much revenue. They not only need that nice little up front payment, but also like the royalties too. Cable Labs job isn’t to ensure quality it’s to ensure that it’s as difficult and expensive as possible to get a PVR to the marketplace.

  4. Anonymous says:

    “Cable Labs job isn’t to ensure quality it’s to ensure that it’s as difficult and expensive as possible to get a PVR to the marketplace.”

    Not quite, CableLabs job is to ensure that it’s as difficult as possible for a thief to decrypt a cable company’s signal.

  5. If Cable Labs was really more concerned about protecting their product from theives, then why do they need each OEM to certify their machine? Why can’t smaller companies agree to share a design and aggregate the costs?

    Do you really think that by decrypting cable that you’ll prevent the thieves from getting copies? Thieves will always exist. If there was a reasonable belief that you might be able to stop theives from getting high def copies I might buy into that arguement, but the truth is that this will not stop thieves from obtaining HDTV content.

    Between leaks in the entertainment industry and technological change, you cannot expect this to eliminate piracy.

    Right now you can get HDTV through attenna for most networks. Instead honest citizens are punished by higher prices and delayed technology. Cable Labs is nothing but a smoke screen for an old economic monopoly who can feel their power slipping.

  6. MikeA says:

    “then why do they need each OEM to certify their machine? Why can’t smaller companies agree to share a design and aggregate the costs?”

    If smaller companies all share a single design, that design will becomes a commodity, with the OEM’s only competitive edge on each other will be pricing pressure.

    CableLabs isn’t doing anything differently than they have ever done before. They have been certifying STB/PVR’s from Motorola, Scientific Atlanta, General Instruments, Sony, etc… for years. They have a process in place, and when Motorola or Sony or any of the others designs a new STB/PVR, they submit it for testing and certification along with any necessary fees and await their certification. Once certified, they start producing and selling the STB/PVR. That has gone on without complaints from anyone that the barriers to entry in this business are impossible to overcome.

    Suddenly, here comes a slew of whitebox PC builders that have yet to build their first cable-TV STB/PVR, demanding to be given special licensing treatment, lower fees and limited amounts of testing all because Microsoft announced a product that may or may not be available to these small OEM’s?

    Your whole rant about the effectiveness of digital encryption is interesting, but that isn’t CableLabs’ cross to bear. Without Microsoft and its Media Center application, would any of these small-time OEM’s still be pursuing CableLabs blessing for any other product of theirs? Go complain to Microsoft that its too expensive to get into the cable STB/PVR business.