Competition for WebTV NetStation debut in U.K. kicks off NetChannel service By Peter Clarke, EE Times Cambridge, England -- NetChannel Inc. (San Francisco), a TV-Internet service provider set to compete with WebTV Networks Inc. (Palo Alto, Calif.), has kicked off its service with the launch of a set-top-box in the U.K. NetChannel in the UK described the start of the service as a "soft-launch," with a full-blown launch, accompanied by advertising, to follow on October 1. NetChannel, a company founded by Cambridge-based entrepreneur Dr. Herman Hauser, is now set to launch its U.S. service at about the same time, in "late summer." Hauser was a co-founder of Acorn Computers Ltd., based here. He has subsequently helped create a series of start-ups in the Cambridge area including NetProducts Ltd., which has quietly introduced a set-top box to allow consumers to view the NetChannel service in Europe. Dubbed the NetStation, the box connects between a TV and the household phone socket, and it is intended to offer easy access to e-mail, the Internet and the World Wide Web via a conventional TV. The NetStation is based on a 40-MHz ARM7500FE microprocessor from Cirrus Logic Inc. with 8-Mbytes of RAM and 4-Mbytes of ROM. A 33.6-kbit/s modem provides the access to the Internet. The box also contains Internet browser software written by Cambridge company ANT Ltd. and a proprietary operating system based on the RISC OS originally offered with Acorn computers. For those who want to write e-mail on their TV, the unit has an optional wired or infra red-connected keyboard. For those who just want to browse, there is an infrared connected remote control. A printer port is provided as standard. If the specification sounds familiar, it is because it is based on a reference design created by Acorn Computers Ltd. for Oracle Corporation's Network Computers Inc. subsidiary. That design was made famous by Oracle chairman Larry Ellison who waved the motherboard aloft at a number of speaking engagements in 1996. NetProducts Ltd. have licensed the design back and put it out for manufacture by a contract manufacturer, Wongs Electronics of Hong Kong, which has factories in mainland China. The NetStation is priced in the U.K. at about $500. In this complicated web of companies, Wongs, a $500-million turnover company, is more than just the contract manufacturer. It is also the major backer of NetProducts Ltd. Together with Thomson Consumer Electronics Inc. and Oracle, NetChannel and NetProducts are ranged against WebTV Networks, a subsidiary of Microsoft Corp., plus Philips and Sony who are licensed to make set-top boxes configured to receive the WebTV service and provide access to the Internet in a similar manner. Internet access from the NetStation is being provided exclusively by NetChannel, for a limited period, with control of that access provided by a smart card. NetChannel is providing unlimited access to its own channels and other Internet sites for about $25 per month, plus the cost of a local phone call. NetChannel will be launched in the U.S. when Thomson Consumer Electronics puts a similar RCA-branded unit into U.S. shops. Earlier this year, that was going to be in "early summer"; that has now slipped to "late summer." A spokeswoman for NetChannel Inc. said: "We want to make sure the hardware and the service are at their best before we launch." She added that the RCA box would be essentially the same as NetProducts' NetStation. Although NetProducts and NetChannel are separate companies, Hauser is on the board of directors of both. The companies are also linked by a cross-subsidy. David Martin, chief executive officer of NetProducts, said: "There is a subsidy from NetChannel to NetProducts, but as volumes increase this will drive down costs." Martin said he expected to sell 30,000 to 40,000 NetStations in the U.K. by the end of the year, with the bulk of the sales coming in the run up to the Christmas holiday season. Securities and Exchange Commission filings revealed that, in the much larger U.S. market and from a start in fall 1996, WebTV amassed about 33,700 subscribers to its online service by Dec. 31 1996 and 56,000 as of April 1 1997. Martin said NetProducts and NetChannel could succeed because PC penetration into U.K. and European homes was much lower than in the U.S. He said that PCs capable of accessing the Internet can be found in only 11-percent of U.K. homes compared with 40-percent in the U.S. "WebTV was trying to make Internet-aware people take another service. Consumers were saying 'I already have an ISP'. They've adjusted to that and NetChannel has geared its service to that." In Europe, Martin believes the NetStation will provide many people's first experience of the Internet. (Next article.) (c) 1997 CMP Media, Inc [This article comes from EE Times in a joint cooperative effort with the Motley Fool. For more articles like it, please look at Fool's Gold every weekend or simply go to the Fool's Gold Mine and page through our back issues, which all have clever and cool EE Times articles in them.]

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