Sand Video to Release First Commercially Available Advanced Video Coding/H.264 High Definition Decoder Core.

Business Editors/High-Tech Writers

ANDOVER, Mass.--(BUSINESS WIRE)--July 21, 2003

Sand Video on track to deliver AVC/H.264 encoder-decoder chip in early 2004

Sand Video, Inc., a recognized expert in Advanced Video Coding/H.264 semiconductor video compression technology, today announced the availability of the SV-IP01, the first high-definition real-time AVC/H.264 decoder core. The core is also capable of decoding high definition MPEG-2 streams, thus supporting existing codec applications as well. The SV-IP01 decoder implements the AVC standard Main Profile with support for all broadcast formats up to and including 720p and 1080i. The core includes support for the complete set of AVC tools, including Context-Based Adaptive Binary Arithmetic Coding CABAC and Context Adaptive Variable-Length coding (CAVLC).

The AVC/H.264 algorithm delivers between two and three times the compression performance of MPEG-2 for a broad range of consumer video applications such as cable and satellite TV transmission, set-top-boxes, DVD players and recorders, personal video recorders (PVRs), digital cameras and camcorders. Systems incorporating the decoder core can have superior image quality, storage capacity and system performance. Sand Video's codec technology can also be applied to other applications such as streaming video, video conferencing, and digital video-on-demand.

As the only company currently offering fully compliant, fully featured real-time high definition AVC/H.264 decompression, Sand Video's SV-IP01 represents a major step forward in the industry for the development of commercial AVC/H.264 digital video products. The decoder core is available to OEMs for a license fee plus royalty.

"We believe the SV-IP01 will increase the appeal, demand and use of AVC/H.264 technology because H.264 delivers substantially higher video image quality at lower bit rates than current technology," said Peter Besen, president and CEO, Sand Video. "Because of the minimal cost to put the decoder into a megachip inside devices such as set-top-boxes or DVD players, the SV-IP01 provides OEMs with an economic benefit and a competitive advantage. We expect major consumer electronics companies will adopt AVC/H.264 and that our technology will be available in consumer products in 2004."

Demand for video compression devices is expected to grow significantly over the next two years. According to industry analysts such as IDC, Dataquest, In-Stat and CIBC, the market for video compression devices will exceed more than 200 million units and $2.3 billion by 2005.

Technology Leadership

In addition to offering the industry's first real-time high definition AVC/H.264 decompression core, Sand Video was the first to demonstrate next-generation high definition codec technology to customers in October 2002 and to the public earlier this year at the 2003 Consumer Electronics Show (CES) in Las Vegas.

"Sand Video is setting the pace of innovation in the field of digital video compression. Our technology will result in dramatic improvements in digital video performance and image quality. Equally important for Sand Video, as we introduce our new technology to the market, we build higher and higher barriers to entry for our competition," said Mr. Besen. "The SV-IP01 decoder core represents a key element in Sand Video's long-term plan, and is available as promised and on time, demonstrating our ability to deliver."

Sand Video's SV-IP01 prototype is currently running in an FPGA, and the company is also on schedule to deliver commercial samples of its single-chip implementation of the decoder as well as its full silicon-based codec chip in early 2004.

Solving H.264 Complexity

Also known as MPEG-4 Part 10, AVC/H.264 is the next-generation video compression standard developed jointly by the ITU and ISO. The standard is much more complex than existing MPEG standards, and requires a completely new architecture to fully realize its performance benefits. AVC/H.264 has been ratified by ITU and is expected to be ratified by ISO by the end of year.

"The decoder was more complex than people originally thought; particularly at the high definition level 4, which is six times the amount of data," said Stephen Gordon, Director of Advanced Development, Sand Video. "Existing MPEG2/4 architectures, including DSPs, can't handle the complexity of the advanced coding tools of AVC/H.264 such as CABAC, smaller motion block sizes, the in-loop deblocking filter, and the extraordinary data rates at HD. The encoder is even more complicated."

"Our team of ASIC and algorithm designers, who already have a number of technological firsts to their credit, have engineered a unique and proprietary solution to the complexity problems of the H.264 standard," Mr. Gordon added. "This solution preserves the image quality and compression performance benefits of H.264, fully supports the complete H.264 toolset and supports cost effective implementation of high volume silicon components. Other solutions, especially those involving a DSP, tend to sacrifice image quality and lower the resolution, and are extremely expensive."

About Sand Video, Inc.: Sand Video is a fabless semiconductor manufacturer focused on developing and marketing superior next generation, standards-based semiconductor video compression technology for a broad range of video applications. Sand Video is a privately held, venture-backed company based in Andover, Mass. For more information on Sand Video, visit www.sandvideo.com.