Wave Systems Corp. (fka WAVXQ)

[barge]

Lengthy, in depth TVTONIC Online-Report! What a meaty article this is! Fascinating implications! And anyone who doesn't think that TVTonic could instantly deliver WAVE into a World Wide player literally overnight, ought read this jaw dropping article carefully, very carefully.

You have to LOVE the headline of this article! LOL!
The headline says in effect: HEY FOLKS MAYBE TVTONIC IS BEING GROOMED BY MICROSOFT TO BE ITS ANSWER TO APPLE TV!!!


And while the article takes a MS/TVTONIC VS
APPLE-TV angle there is this one fascinating tidbit!

"Wavexpress' Sprague was, however, very careful and very specific
when he said, "TVTonic cannot now play videos that have been
downloaded from iTunes." The operative word appears to be "NOW."


http://www.onlinereporter.com/article.php?article_id=9015

Is Microsoft's Answer to Apple TV Already on the Market?

By: The Online Reporter
Date: March 16, 2007


- 20m Xbox Users Can Activate 'Microsoft TV'
- Wavexpress Wraps Its TVTonic Future Around Windows Media Center
- Will Video Quality Win Out on the Net?

Apple seemingly has all the marketing moxie these days, especially
when compared to Microsoft. Remember when Microsoft used to have
lines of people around the block waiting to get into a retail store
to buy Windows 95?

Apple's touch is so good that it has had press, analysts and
consumers all gaga about the upcoming Apple TV for months. The $300
product, which was delayed a month for unspecified reasons, will
allow users to watch the videos they've downloaded to a PC on their
TV set in another room. It's being hailed as the savior of the
nascent digital media industry.

Michael Sprague, president of Wavexpress, which offers the free
TVTonic video service, has another view, saying that Microsoft has
already beat Apple to the punch with a device to connect PCs and TV
sets. It's called Windows Media Center Extender and the software
comes in practically every PC that a consumer is likely to buy these
days.

Apple TV Media Center PC with Xbox
HD DVD no yes
DVR recording no yes
Multi-disc jukebox support no yes
Third-party applications no yes

TVTonic lets users subscribe to free Internet "channels" and have
the content delivered to their PC in the background, taking
advantage of unused bandwidth. TVTonic content is cached on the PC's
hard drive, which removes the choppiness associated with streaming
video.

Media Center offers a remote controlled, set-top-like interface for
music, photos, video and television content. The Media Center
Extender is a device that will "extend" that functionality to the
living room's TVset.

All that's needed is to connect the TV set to a Windows Media Center
Extender like the one that Linksys makes (model WMCE54AG - $100 at
Best Buy) or an Xbox 360, which has the Extender built-in.

20m Installed Base
With 20 million Xbox 360s already in consumer homes, there's a large
market waiting. When connected, an extender like Xbox and a Media
Center PC automatically find each other over a wired or Wi-Fi
network. "Media Center" appears on the Xbox "Start" menu, allowing
the user to select a video that's on the PC and play it on the TV.

Without Xbox or a Media Center Extender, consumers can only use
TVTonic on the PC. However, some PCs such as one from Niveus are now
designed to go in the "stack" of home entertainment boxes and can be
easily connected to use the TV set as the display. When a consumer
wants to have the PC display on the TV set, he uses the "TV input"
button on the TV's remote control to select the PC for input.

And, says Sprague, Media Center plus an Extender or Xbox provides a
system that's ahead of what most folks think the Apple TV will
offer. That includes being able to use TVTonic's video player,
which, Sprague says, delivers HD-video quality as good as anything
out there, including the upcoming Joost, which will be a TVTonic
rival.

The angle for Microsoft here is feature, functionality, maturity and
reach.

Any and All Internet Video
TVTonic has an advantage over Joost because it plays any and all
Internet videos, not just those from its content partners. That
doesn't include, of course, AAC files that are protected by Apple's
FairPlay DRM, something that no one but Apple and one model of a
Motorola mobile phone can play.

Wavexpress' Sprague was, however, very careful and very specific
when he said, "TVTonic cannot now play videos that have been
downloaded from iTunes." The operative word appears to be "now."

TVTonic also plays QuickTime videos, which is what most video
bloggers use. However, Sprague said there appears to be an emerging
movement by the video bloggers to add support for Microsoft's
Windows Media Video format because they are starting to see the
benefit of supporting Windows Media. Video bloggers generally tend
to be Apple fanatics since the majority of affordable video
production software seems to be made for the Mac. But they also
really like the idea of getting their video onto the Xbox and into
the living room.

The '10-foot' Viewing Experience
The goal for TVTonic is to deliver the best "10-foot" viewing
experience for videos that are stored on a PC. Because it's tightly
integrated with Windows Media Center, including the new Vista
version, the TVTonic player, which is a Media Center plug in, can be
operated from across the room with the remote control that comes
with Windows Media Center PCs. And, because Microsoft now includes
Media Center on practically every Windows PC that's sold, chances
are that the PC that any consumer, or even small business, purchases
comes with Media Center capabilities.

Since its inception, Wavexpress has aimed to provide the highest
quality video. To that end, content is delivered in the background
and cached on the PC's hard drive where it'll be ready to view, even
if it's still downloading. In that sense, TVTonic is more like
podcasting than streaming.

Sprague says that despite some of the amateurish stuff that's on
YouTube, the quality of entertainment video on the Net has been on
the rise the past few years.

Of course, one can't forget that YouTube's success, according to
many, has been largely built on the illegal sharing of copyrighted
content. Thus the billion-dollar lawsuit that Viacom filed this
week.

There has been a surge of quality videos being produced for Internet
distribution that don't carry copyright restrictions, said Sprague.
There is also growing momentum for clearing traditional television
productions for availability on the Internet.

HD In, HD Out; No HD In, No HD Out
In the PC space, the high-definition issue is very fuzzy, according
to Sprague, and videophiles have a million opinions on the subject.
If the PC has a fast processor, a "crisp" monitor (as most computer
screens and new TVs now are) and ample bandwidth or disk capacity,
HD quality can be displayed. Enabling HD over the Internet is just a
matter of bandwidth, if streamed, or disk capacity, if cached.

Apple TV will support HD playback just as well as Windows does. HD
quality, however the term is defined for a PC, also depends, of
course, on the camera that was used to make the video and on the
encoding. TVTonic supports WMV formats so it's capable of quite high
video fidelity.

TVTonic plays in full-screen mode on Vista PCs. The company has
worked to achieve an experience much like television, where video is
always the primary image. To that end, it designed an interface that
always maintains a full-screen video picture. With new tools
available in Vista, the company was able to develop interactive
menus as subtle overlays on top of the video. The viewer can then
navigate through the available channels and interactive elements
without ever leaving the primary video display.

Rocketboom, which is a TVTonic partner, now shoots and encodes all
its episodes in high-def. Gametrailers.com, which offers a lot of
original content, also shoots and encodes much of its stuff in HD
quality.

TVTonic currently promotes 300 handpicked channels that, it says,
are the best media brands freely available through the Internet. A
significant number of these are signed to revenue-share agreements
with Wavexpress, which is continuing to sign up more content
partners. Current partners include:
- The AP News
- Hollywood.com
- Ziff Davis
- Revision3
- Rocketboom
- Music videos from Astralwerks, Sub Pop, TVT, Mute, Victory and the
like

Reportedly Microsoft, perhaps sensing the potential boom in sales of
entertainment PCs, has set aside one-third of its marketing budget
for Media Center. After all, Microsoft already practically owns the
corporate market, especially for desktop and laptop PCs, but faces
stiff competition in the home entertainment market from the likes of
Apple, Linux-based boxes like media servers and DVRs themselves,
which the pay-TV services are touting as home media hubs in
competition with PCs.

Riding the Microsoft Marketing Bull
Microsoft's focus on home entertainment is benefiting TVTonic. So
happy is the software giant with TVTonic's results, it appears, that
it's promoting TVTonic and its content partners.

Media Center laptops with big screens are very popular, according to
Sprague - the traveling workingman cannot live by work alone, it
seems - with some nice models in the $1,000 range.

There's a little-noticed, but perhaps significant, enhancement to
Vista Media Center that will interest mediaphiles with big wallets.
It supports multi-disc CD/DVD jukeboxes - the kind that hold as many
as 400 discs. Each CD and DVD shows up in the Media Center's
library.

There is no TVTonic for Macintosh computers.

So, comparing Media Center with Xbox or an Extender with what's
publicly known about Apple TV shows:

Sprague points out that Media Center has the "maturity" that comes
from Microsoft having spent four years developing and honing it.

Competition
TVTonic doesn't compete directly with Akimbo's Internet-based video-
on-demand service, Sprague said, because the Akimbo service was
developed for videos that were originally produced for TV. iTunes,
Joost, AOL's In2TV and other sites that offer streams and video
downloads are also not direct competitors to TVTonic, he said.
TVTonic is focused on bringing videos that have been developed for
the Net to the television. That could, of course, include the kind
of 90-second episodes that Michael Eisner's Vuguru announced this
week.

Ultimately, of course, all video distribution operations are
competitors, vying for the consumer's time and attention. Each has
its own ideas on how best to reach and then entertain the end user.
What it comes down to will be which service is the most accessible
and the most enjoyable. Sprague believes there's room in the market
for a number of providers - and each different flavor will attract a
different audience at different times - much like the many TV
content networks compete today.

YouTube and other video sharing sites are not direct competitors
either, according to Sprague, again because people aren't likely to
watch them on the living room TV.

The key question that best elicits TVTonic's role, said Sprague, is
"Can it keep someone entertained in the living room for 15-20
minutes?" If so, he said, then TVTonic has accomplished its mission.

Box Notes
Linksys - The Linksys model WMCE54AG Extender currently works with
XP Media Center Edition and Linksys says support for Vista is coming
soon. We could not find any other Media Center Extenders, aside
from, of course, the Xbox 360.

Niveus PCs - Niveus says its three Media Centers PC models are the
quietest because they have no fans. They also have a sleek design
that makes them look like other home audio-video gear - and they fit
in the home's AV stack. Niveus says they have the kind of fidelity
that's expected from high-end audio video gear.

All three models are capable of storing, managing and playing
television, music, radio, movies and photos.

The Rainier Edition uses Intel's Viiv technology and optionally
supports HD DVD movie playback.

The Denali Edition has a high-end amplifier; 192 Khz/24-bit, eight-
channel audiophile sound; 720p/1080i grade HDTV; 1TB of storage and
runs on the Viiv Intel Core 2 Duo.

The Denali Limited Edition has Pro A/V and an HD DVD drive.