French Firms Take On Microsoft

Orange (NYSE: FTE) has formed a joint venture with fellow French firms Thomson S.A. (NYSE: TMS; Euronext Paris: 18453) and Sagem Télécommunications SA to develop software that can connect digital devices and content in the home, and effectively pose a direct challenge to Microsoft Corp. (Nasdaq: MSFT)’s MediaRoom initiative. (See French Firms Form Soft At Home.)

The joint venture, Soft At Home, is initially majority owned (60 percent) by FT’s residential business, Orange, with the other two partners each holding a 20 percent stake. It will employ between 70 and 80 staff by the end of 2008. No financial details have been released.

The three partners are well known to each other, as both Thomson and Sagem are key vendors for FT’s triple play services -- Thomson supplies the Livebox home gateway and its SmartVision IPTV middleware, while Sagem supplies IP set top boxes for the carrier’s IPTV service. (See Top Ten: IPTV Carriers and France Telecom Intros TV Over DSL.)

But the French firms are hoping to attract widespread support, especially from other operators. Thomson spokeswoman Martine Esquirou says the plan is to “open up the shareholding to other partners, mainly operators. Probably, in the coming months and years, Orange’s share will be reduced.”

The aim of the joint venture is to speed up the adoption of technology that will enable digital devices to interconnect over a home network, enabling people to access and share content wherever it is stored in the home. “We are trying to [pull together] all the efforts already made by Sagem, Orange, and Thomson, and open the standard to other operators and to have a single way of doing things, to enable interoperability,” says Esquirou.

Orange isn’t going to wait to see if other carriers favor the Soft At Home approach -- the French incumbent notes that “the next generation of residential gateways and TV decoders that will be used by Orange in 2008 will be equipped with Soft At Home software.”

The whole idea of enabling residential users to create a seamless home network where digital content can be accessed easily on multiple devices is right in line with Microsoft’s aims for its Mediaroom package, which has the software giant’s IPTV platform at its heart. (See Microsoft Adds to Mediaroom, Microsoft TV Opens New Lab, and Microsoft Unveils IPTV Platform.)

And according to reports from a press conference held in Paris this morning, Orange let it be known that it is aiming to take on Microsoft, which already has 20 carriers as Mediaroom customers, including some of the world’s biggest players. (See Swisscom Still Dogged by IPTV Issues, Microsoft Seals $500M IPTV Deal, Singtel Does IPTV, Microsoft Powers BT Vision, Microsoft Wins IPTV Deal at DT, and SBC Awards Microsoft $400M IPTV Deal .)

Cited in a Reuters report, Georges Penalver, a France Telecom senior executive responsible for strategic marketing, stated that “our standards will respond better to the needs of telecoms operators than others," such as Microsoft. France Telecom had not responded to requests for further comment as this article was published.

Battle for the living room
The main criticism often leveled at Microsoft is that it is trying to "take over the living room" with its proprietary technology. Microsoft refutes such allegations, and says its software is standards-based.

So what is Soft At Home doing to avoid the same accusations? Its launch statement notes its intention to create “a standard for the interconnection of equipment within the multimedia ecosystem” -- yet Soft At Home is a commercial venture, not a standards body.

Thomson’s Esquirou says the software developed by the venture will be based entirely on existing industry standards.

Those standards, according to François Josserand, a Thomson marketing executive and managing director of Soft At Home, include: Linux as the operating system (OS); specifications developed by the Digital Living Network Alliance (DLNA) and UPnP (Universal Plug &Play) Forum ; the Broadband Forum 's TR-69; specifications developed by the Home Gateway Initiative (HGI) and Open IPTV Forum (OIPF) ; SIP; H.323; and Javascript.

He adds, in an email response to questions: "Soft At Home will implement services based on DLNA and expand beyond existing features and use cases. It will contribute back its developments if they are accepted. Soft At Home will become a member of such organizations."

Microsoft had not responded to a request for comment as this article was published, but there was reaction to the development from the Home Gateway Initiative, a carrier-led body that is just one of a number of industry groups aiming to iron out many of the technical issues that the home networking environment throws up, particularly as related to interoperability. (See the Standards & Initiatives section of Who Makes What: Telco Home Gateways.)

Paolo Pastorino, CTO and main spokesperson at the HGI, says the French trio’s initiative is “definitely a good move. It’s another recognition of the big problem -- trying to find a fully working ecosystem. Transferring applications between consumer electronics, IT, and telecom infrastructure is very difficult.” (Note: All three Soft At Home companies are members of the HGI, but the formation of the joint venture had not been communicated in advance to the industry body.)

”Any tool that can create an easy environment [for the home user] is good, but we will have to see the outcome and the capabilities and the timeline,” says Pastorino, adding that the new joint venture will likely be widely discussed at the HGI’s next plenary meeting in Boston next week.

So could the specifications and products developed by Soft At Home possibly be adopted by the HGI? “It’s possible, but it depends on the agreement of all the vendors. Maybe bridges with other solutions might be needed,” notes Pastorino.

— Ray Le Maistre, International News Editor, Light Reading