NoyoTec: Gwyneth Paltrow on demand

The crystal ball wizards predict Set-Top Box devices containing Personal Video Recorders (PVR) with digital recording capacity will reach the market next year and mention a figure of 13 million devices worldwide. What is special about these devices is a large storage drive of several dozen gigabytes, to which viewers can download their favorite programs for viewing at their leisure, not necessarily when the programs are broadcast.

This is not the same as video programs that record at a given time. For example, a person could decide in advance to record every movie broadcast featuring Gwyneth Paltrow, without knowing the broadcast schedule.

The problem with these devices is availability and price. Telecommunications and media companies are trying to find models that will allow faster deployment of these devices. The problem is more difficult when an absolute majority of homes in the Western world have more than television set, and a Set-Top Box is needed for each TV set.

The price of every such home box is the same as the price of a PC - $600-700. One solution for the devices’ high price and low availability will be through home networking. By linking the home network to the TV, one PVR device can be stationed in the home, through which video can be streamed to every TV set in the house.

A box called a Home Media Server (HMS) will be responsible for streaming video to the various channels. This server is a powerful PC capable of simultaneously handling a number of video streaming channels. Research company forecasts show that for every three PVRs sold, in the long run one HMS device will be sold.

One of the players in this field is Israeli start-up NoyoTec, founded by CEO Gabbi Zennou in February 2000. NoyoTec wants to eliminate the need for a powerful media server by transferring its functions to a single ASIC chip. NoyoTec’s revolutionary application is designed not only to improve video streaming to the various channels, but also to substantially lower the cost of an HMS.

”This is a revolutionary new concept,” says Zennou. “It is the first application in the world that puts a large streaming server into a single chip with the power of a computer, interfaces for storage drives, input-output interfaces, and a powerful video engine. Each component will have only a two-digit price.”

According to NoyoTec VP marketing and business development Yuval Agami, the company expects its first substantial order of its product from a systems integrator, who will install the video systems in 600 European hotels.

There are two markets in the HMS field: home boxes and boxes for a neighborhood center, to which all the residents can be hooked up. NoyoTec develops products for both markets. Zennou and Agami say NoyoTec plans to significantly lower the price for users in both markets: from $700 to $120 for its home box and from $300-500 to $50 for its neighborhood box (the price for the neighborhood box is divided among those linked up to it).

The company’s first chip for the home market is capable of supporting streaming at 200 Mbps, meaning that 50 users can each get the movie they want, without any compromise on viewing quality.

NoyoTec’s second chip will stream 1 Gbps to 250 simultaneous users, and is designed to manage one terabyte of memory.

”Telecommunications companies also want to offer video services,” Zennou says, “but they have a problem, because the bandwidth is limited. It will be difficult to provide a large number of users with high-quality service. The only solution is to station boxes inside the home. This type of solution enables these companies to reap large profits from this market, and our product is therefore very interesting to telecommunications companies.”

NoyoTec’s product is ready for display now, and the company is beginning to explore strategic partnerships. The company is negotiating with a leading home consumer appliance company to construct the HMS device. NoyoTec will display its HMS device, which will stream eight video channels simultaneously, at the prestigious April exhibition of the National Association of Broadcasters (NAB).

Regarding the trend in home networks designed to support HMS streaming to more than one TV set, NoyoTec says it has no definite preference; its technology can stream video on any platform: copper wires, RF, Bluetooth, etc. Adapting its product to each type of network will be fairly simple.

Investing in the competitor is good

Zennou and Agami recently discovered a US competitor named Moxi, founded by originators of WebTV. Moxi raised $67 million less than a year ago from AOL-Time-Warner (NYSE: AOL), Cisco Systems (Nasdaq: CSCO), EchoStar Communications (Nasdaq: DISH), and others. “We are glad to see such an investment in a company similar to ours,” Zennou says. “It validates our technology. Furthermore, Moxi isn’t really a competitor. It could use our chips and greatly lower the price of its device.”

NoyoTec is settling for far less than $67 million; the company is currently in the midst of raising $5 million in its second financing round. The company raised $1.2 million in its first round in December 2000, in which ProSeed Capital Holdings, two private investors, and the Ministry of Industry and Trade’s Chief Scientist participated. NoyoTec is headquartered in Haifa and has 10 employees. Zennou plans to recruit 10 more development personnel in the coming year.

Published by Israel's Business Arena on February 13, 2002