Moxi Digital Merges With Digeo

By Greg Tarr -- TWICE, 3/29/2002

PALO ALTO, CA - Moxi Digital, the developer of cable and satellite-based set-top networking systems, announced it has signed a definitive agreement to merge into Kirkland, Wash.-based Digeo Inc. under a new company that will keep the Digeo Inc. name.

The operation used additional funding provided by Moxi's lead investor Vulcan Inc. - the firm run by Microsoft co-founder Paul Allen, who will oversee the new Digeo operation - to "strengthen and accelerate the development and delivery of advanced media center platforms and iTV services," according to an official statement.

The companies said the merger would enable them to "fuse their intellectual capital, market traction, proprietary technologies and respective product strengths."

Digeo will continue to pursue its vision of simultaneously enhancing and simplifying the consumer home entertainment experience through its "strong partnerships with leading cable-industry companies such as Motorola and Charter Communications.

Allen serves as Digeo's chairman of the board. Other directors include Jim Billmaier, Digeo CEO; Carl Vogel, Charter Communications CEO; William Savoy, Vulcan president; Edward Harris, Vulcan senior investment analyst; and Kevin Fong, Mayfield general partner.

The new Digeo senior management will include a mix of Diego and Moxi executives, including Billmaier (CEO); Rita Brogley, former Moxi CEO who becomes Digeo's executive VP of business development and marketing; Larry Weber, Digeo's Advanced Systems president will retain his current role. Additionally, Digeo senior VP Bert Kolde becomes Diego's chief operating officer, and Toby Farrand, Moxi's engineering VP, will be Diego's chief technology officer.

"This merger will allow us to deliver a family of media center platforms more rapidly," said Paul Allen, Digeo chairman. "These new platforms will define the benchmark for the next generation of set-top boxes."

Billmaier added that "Digeo and Moxi have been working along parallel paths to implement very similar visions. We believe these new platforms will be very attractive to cable and satellite companies looking for new revenue opportunities."

Moxi Digital founder and vice chairman Steve Perlman, said of the merger: "My goal for establishing a world-class technology company that would revolutionize home entertainment has been realized by Moxi joining forces with Digeo and Paul Allen."

Perlman recently stepped as CEO of Moxi Digital amid reports that the company was in financial difficulty and did not as firm a commitment from EchoStar as was implied during press events at January's Consumer Electronics Show.

An EchoStar spokesman did not return calls to clarify its contractual status with Moxi.

Both companies had previously announced plans to introduce media center products that would bring advanced home networking capabilities to broadband and multi-channel television services.

Motorola's Broadband Communications Sector is manufacturing a new class of advanced set-top devices collaboratively designed with Digeo, called "broadband media centers."

The first model - the BMC8000 - is a companion device for Motorola's DCT2000 digital set-top; and the second - the BMC9000 - is an integrated system.

Charter Communications plans to begin rapid deployment of the advanced media center platform in 2002 and has deployed Digeo's Basic iTV service to more than 558,000 homes, making it the most widely deployed cable iTV service in North America, according to the Digeo statement.

Over the coming months, the new Digeo will integrate its products and technologies into a single offering. Digeo is said to have expertise in "the back-end infrastructure and operations necessary to deploy services into a subscriber's home," while Moxi honed its skills in developing "a robust platform" for managing the routing of multiple media streams throughout the home.

"This merger is a win-win situation for the consumer and cable industry alike," said Vogel, Charter's CEO who formerly held top management positions at with the EchoStar and Primestar satellite TV companies.

In addition to the new funding from Vulcan Inc., Digeo is also backed by AOL Time Warner, The Barksdale Group, Charter Communications, Cisco, EchoStar Communications, Macromedia, Mayfield and The Washington Post Company.

The new company will maintain dual headquarters in Kirkland and Palo Alto, and the combined firm's 328 employees will be retained.