Internet TV - The techie who turned to TV.

Hermann Hauser thinks the consumer is missing out on the 'party' that is the internet. And, despite being the man who put one of the first PCs into UK homes, he wants the humble TV to be their route to the net, says Richard Lord.

Interactive services haven't quite hit the mass market yet. After all, there are only a couple of million internet users in the UK, and most of them only have internet access in their offices, using PCs. So for the companies trying hardest to get more consumers using the internet, a major priority is to allow a greater number of people to access it through non-PC devices.

Ironically, one of the most notable advocates of an alternative internet access device is one of the people who did the most to popularise home computers in Britain in the first place.

Hermann Hauser was one of the co-founders of Acorn Computers. In 1981 he led the team which created the BBC Micro, one of the first computers to find its way into the nation's living rooms. Sixteen years and 25 companies later, Hauser is trying to get into people's living rooms through a far more conventional route: their televisions.

Hauser is now chairman of NetProducts, the company which makes the NetStation internet-on-TV set-top box. He's also chairman of NetChannel, which provides personalised internet content channels designed for use with boxes like the NetStation.

These days, Hauser may be evangelical about the TV as a means of accessing the internet, but that doesn't mean he thinks it's about to replace the PC. "I think there will be a multiplicity of devices," he says. "The PC didn't replace the minicomputer and the minicomputer didn't replace the mainframe. The TV is just a new access mechanism.

"However it's a fact that 95 per cent of households have televisions, while only 25 per cent of them have PCs. What we're doing with the NetStation and with NetChannel is creating a TV-centric version of the net. It's consumer-friendly. Currently there are a lot of business services online, but not many for consumers."

According to Hauser, there is a huge unfulfilled demand among consumers for access to the internet. In support of that view, he cites research into consumer preferences which NetProducts recently undertook. "We asked people if they were interested in the internet," he says. "What we found was that everyone has heard of it, but hardly anyone is on it. There was a feeling that there was a party going on and that they were being left out.

"We talked to more than a thousand consumers and the problem was that people didn't want the internet because they didn't want to own a PC.

It's too technical and too expensive. The proposition of having something for œ299, which is well under half the price of the cheapest computer, and also of operating it with a remote control, takes the fear away for a lot of people."

Contrary to expectations, NetProducts found that interest in the internet cut across different demographic groups. "Whichever way we cut it, we found a uniform interest," says Hauser. "Whatever the demographic distinction, we found that about 30 to 40 per cent of people were interested in the internet: men or women; people with children or people without children; different income groups; different ages; people with computers or people without computers. We expected people without computers to be our main customers, but we found that people with computers want internet access through their TV as a way of stopping their kids using their computers.

"But with all of these groups, we found that people really did want to find out about the internet. We found it wasn't just interactive services in general that they were interested in - it was specifically the internet."

Hauser agrees that the days of set-top boxes which simply transfer the internet onto a TV screen are numbered, particularly with the advent of digital television, which will provide specially created interactive channels, offering home shopping or banking, for instance, alongside traditional TV programming.

He claims this is good news for both NetProducts, which will adapt its box accordingly, and for NetChannel, which he says offers something broader than just the internet. "All our next-generation boxes will be interactive TV-equipped. That's definitely the direction we're moving in. That's going to be way the whole market moves, I think. Digital TV and broadband internet access will merge and become elements of the same thing.

"Digital TV will be able to give you information in real time, but you'll also be able to get hold of more information at the click of a button.

Think of the internet as a very fancy teletext on steroids. Our next offering, which will be ready some time towards the end of next year, will overlay TV channels and broadband internet access. Digital TV isn't a threat to NetChannel. Digital TV companies like BIB and BDB are potentially our customers."

He accepts that in the meantime, the real threat to NetProducts and NetChannel comes from direct rivals like Microsoft's WebTV, which combines an internet-on-TV set-top box and dedicated content. Hauser is confident, however, that separating content provision from hardware manufacturing is the right way forward. "WebTV will be a threat, but I'm actually pleased about it: we could never have spent as much money publicising the idea of the internet on TV as Microsoft has spent. WebTV's big problem is that it's both the box and the service. We think it's important to keep the two separate. In the UK the NetStation comes with NetChannel bundled, but in other countries we might want to sell the NetStation without NetChannel.

There are already other content providers designing content specifically for the NetStation. Similarly, in some countries we might want NetChannel to work with other boxes."

NetChannel is currently talking to 24 different box manufacturers about supplying content to them. The company's finance director Michael Carter claims that NetChannel is only working with NetProducts in the UK because the box maker was the first company to market here. Hauser claims NetChannel is looking to be able to fund its service with advertising and transactions eventually. In the short term, however, the main source of revenue will be subscriptions.

"NetChannel wants to capitalise on bringing the internet to consumers.

At the moment it's on PCs. For the business model to work, you have to have reasonable penetration, so you can divide and segment your audience and get at them with advertising. NetChannel can find out what you're interested in and lead you to sites you'd like without you having to know.

But we have to be careful, and make sure that we give people something relevant."

Hauser has recently backed up his faith in the potential of new media by co-founding Amadeus, a venture capital company focusing on early-stage investment in British high-tech companies. The company is aiming for œ30million for its first fund, and already has a œ5million contribution from Microsoft.

"I'm seeing so many high-quality proposals," he says, "and a lot of them are ideas for electronic commerce ventures. I think e-commerce on the net will restructure the economy fiercely, and I think that will really happen next year.

"We've already seen a lot of significant steps towards e-commerce taking hold. The first big stage for me was when Compaq abandoned its commitment never to sell direct. It has been the company most loyal to its dealers, but now it's selling over the internet. That's solely because companies like Dell and Gateway 2000 have sold over the web so successfully."

Hauser says he is pumping cash into new ventures because a lot of existing companies will fail to adapt to e-commerce: "There's a new uncertainty in big companies. Because they're so big, a lot of them are just too slow to pick up on this. Companies may have to change their business, and that may hurt, but it's better to hurt your own business than for someone else to do so."



Hermann Hauser - A Brief History

1978: Co-founder, Acorn Computers.

1981: Led the team which developed the BBC Micro Computer, one of the first popular computers for the home and classroom.

1986: Vice-president of Olivetti. Set up the company's research organisation.

1993: Founder, Electronic Share Information, an internet-based stock price system which now has over 130,000 subscribers and claims to be one of the five busiest web sites in Britain.

1996: Founder, NetProducts, the company which produces and distributes the NetStation set-top box.

1996: Founder, NetChannel, a company which creates personalised internet services for consumers delivered by PC, and in future, through TV set-top boxes.

1997: Co-founder, Amadeus Capital Partners, a venture capital fund focusing on early-stage UK high-tech companies.



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