In-Stat/MDR Reports Microsoft, Intel and IP to Bring Changing of the Guard in VOD Server Markets.

Business Editors/High-Tech Writers

SCOTTSDALE, Ariz.--(BUSINESS WIRE)--May 19, 2003

With Video On Demand (VOD), Subscription Video On Demand (S-VOD), Network Personal Video Recorders (N-PVR), and "Anything On Demand" (X-VOD) all being made ready for widespread deployment by service providers throughout the world, the market for VOD servers is heating up, reports In-Stat/MDR (http://www.instat.com). The high-tech market research firm expects that efforts on the part of Concurrent Computer Corp., SeaChange International Inc., and nCube to promote the market for VOD services are finally ready to pay off. However, market dominance of these three players will begin to wane out in 2006, as companies that make distributable servers take over the market with lower cost points and smaller form factors.

"The 'big three' VOD server companies have worked hard to establish this market, but Microsoft, Intel and the Internet are catching up, providing lower bit rates for each VOD stream, and higher performance at lower cost points," said Gerry Kaufhold, an analyst with In-Stat/MDR. "Network-based Personal Video Recorders (N-PVRs) work best if small, inexpensive, VOD servers are placed out near users, on the edge of the network. Companies bringing these new distributable VOD servers to market include Entone, Kasenna and MidStream Technologies."

In-Stat/MDR has also found that:

-- Microsoft's Windows Media 9 Series is being accepted as a new

compression standard for VOD services, providing DVD-like

quality at about 1 Megabit/second, and High Definition TV

(HDTV) at about 5 Mb/s. This reduces both storage requirements

and bandwidth consumption for VOD services, and will make some

new opportunities possible that were not available even just

one year ago.

-- New companies are appearing that have lower-cost VOD servers,

which take advantage of the ever-increasing performance of

Intel's Pentium line of central processing units (CPUs). Many

of these new solutions are using Microsoft operating systems,

development tools, and Windows Media 9 Series, to provide

robust VOD solutions. Internet Protocol has "grown up" enough

to support broadcast quality video services that run over

Ethernet. Specifically, Gigabit Ethernet is finding its way

into many VOD products and services.

-- Linux permits companies to create customized "extensions" to

support VOD, and Linux does not require any licensing fees.

Microsoft has responded to the threat from Linux by reducing

their licensing costs and royalty fees, making Windows-based

VOD solutions much more attractive. Finally, MPEG-4 will,

eventually, reduce the amount of bandwidth needed to deliver

VOD. These five phenomena -- Microsoft, Moore's Law, Linux, IP

and MPEG-4 -- are likely to cause a changing of the guard

among manufacturers of VOD server products during the next

five years.

-- The value of VOD servers was about $196 million (U.S.) during

2002, and is expected to grow at a Compound Annual Growth Rate

(CAGR) of about 32.7% through 2007.

The report, "Video On Demand Servers: Microsoft, Intel, IP To Bring A Changing Of The Guard" (No. IN030589MB), presents In-Stat/MDR's finding on the technology evolution in the Video On Demand server market, and defines four categories of VOD servers. The report presents in-depth, five-year, regional and worldwide forecasts for each category of VOD server, including unit shipments, number of streams shipped, cost per stream, cost per server, and market value. To purchase this report, or for more information, please visit: http://www.instat.com/catalog/Ccatalogue.asp?id=39 or contact Erin McKeighan; [e-mail] or 480/609-4551. The report is priced at $4,495 USD.

About In-Stat/MDR

In-Stat/MDR (http://www.instat.com) offers a broad range of information resources and analytical assets to technology vendors, service providers, technology professionals and market specialists worldwide. The company stands alone in its ability to integrate both supply-side and demand-side research methodologies into a single comprehensive view of technology markets and products. This capability relies on a unique ability to cover the entire value chain from engineering-level technology, through equipment, infrastructure, services and end users.

In-Stat/MDR is part of the Reed Electronics Group, a division of Reed Elsevier (www.reedelsevier.com), a world-leading publisher and information provider. With over 38,000 employees worldwide, Reed Elsevier operates in the science & medical, legal, education and business-to-business industry sectors, providing high value and flexible information solutions to professional end users, with increasing emphasis on the Internet.