Internet tv, internet video device, tv set top box, iptv, apple tv, google tvVerismo Networks is a privately held Internet TV platform company headquartered in the USA with a research and design center located in India. They have developed multiple award-winning customizable end-to-end solution for delivering Internet videos direct to TV. Here is an exclusive interview of the co-founder and chief architect of the company.
Q. Could you introduce us to your company?
Verismo is an Internet TV startup. When we started in 2005, we noticed 2 things: Broadband penetration was growing at a tremendous pace worldwide. When I say broadband, I mean high-speed broadband. We had broadband starting in 2000 but pretty much in 2003, 2004, and 2005 we began to see ADSL2, ADSL2+, and cable modems with higher bandwidth.
So these were capable of doing large data transfers at high speeds. The second data point that we saw was that a lot of things were getting digitized. Your digital cameras had reached a pretty serious tipping point, and cell phones started coming out with integrated digital cameras. Then there were these independent media producers. As the cameras started getting more digital, the cost of these cameras also dropped.
For instance, if you were a wildlife enthusiast you could take a non-professional camera, like a digital camera, and actually shoot decent-quality content. So you as a normal consumer would have started generating content. You now have the tools to generate content without having to go to a serious professional. So we noticed that on one side digitization is increasing and on the other side Internet was growing as a medium for high bandwidth. So we realized that there was a serious play for the convergence of these two.
So if there’s a product that brings digitised content over the Internet, then there’s a business to be built. So Vijay Maheshwari and I started the company in the US in 2003. 2005 is when we established Verismo in India as our R&D arm. So the headquarters is in Silicon Valley and the R&D is in Bangalore.
To know the impact of the Indian arm, there are 100 people here and 10 people there. The HQ only takes care of things like gaining investment and dealing with customers and so on. The complete Research and Development in the Bangalore arm.
Our product right now is in its 4th generation. You must have seen the TV set-top boxes that make use of close-loop content providers. Now all that content is also being made available on the Internet as the content providers have moved to the Internet and all devices are now Internet capable.
What we do is we built a full end-to-end system, so if you have a capital set of consumers we can get you in business in 3 days.
Q. Is this a captive company?
The India unit is a 100 percent subsidiary, so in that sense, it is a captive company. All the product development happens here and we don’t design for any other company.
Q. What is your most innovative product?
It’s an Internet TV set-top box. In 2009, the ISA (Indian Semiconductor Association) awarded us with the most innovative electronic product built out of India.
Q. What is the name of this product?
It’s actually called an Internet TV set-top box. Since we don’t go to the consumer directly, we basically work on an OEM model. For example, Netgear, a company that makes routers and other media products, will license the whole technology from us and probably put their own casing and go to the consumers. Netgear calls it NTV. Our Indian client whom we have licensed to sells it with the brand name of ADTV set-top box.
Q. What differentiates your product from similar ones in the market?
We have won several awards from CableLabs, Audioholics, and other organizations.
Essentially, the innovativeness is creating an Internet TV device, which is very small. The usual TV set-top boxes are usually very small. So the innovation centered around how to shrink the device such that you could even keep it in your pocket. The US consumers, which was our initial market, are very picky about these things. For example, this is a TV connected product, so you need to keep this near a TV.
These consumers would keep the TV on a rack that is designed such that the DVD player is fixed in one place, your screen is fixed in one place and so on. They are very sensitive about where do I keep the box, where does it look good – they can’t leave it hanging somewhere. So what we thought was we had to change that consumer mindset. What we told them was to not look at this as another box, it is so tiny that you could keep it at any part of the system and it would not be even visible. The idea was that you could keep it a trivial part of your entertainment system – you could even Velcro it. So it’s like the box is not even there.
Another big differentiator is that there are a lot of software. We’ve got the media processor and very powerful electronics inside but the whole integration is done through software. There are broadcast solutions, on-demand content, a slick UI, support the variety of formats and codecs. In the last two years we have seen H.264 video compression standard. But when we started we had Windows Media, Real Format, MPEG-2, MPEG-4, H.264. So another challenge was to be able to tell the content providers that you bring the media in any format. So integrating all these formats is in itself a great challenge.
Q. What are the latest trends in this field? Can smart TVs integrate your whole product into them and how has competition like Apple TV and Google TV affected you?
Technically Smart TVs can integrate our device into them. But when we do that we have to balance out the benefits in order to make successful business out of it.
Fact is that TV margins are already very thin. So if we add another component in it, you have to balance the economics of it based on how much value it gives. On one hand, the value addition might attract more buyers to the device. On the other hand there is the risk that consumers may return the product because one component may not work. This risk increases with TV complexity. So if you bought a 35000 rupee TV and if one component worth a few thousand rupees is not working the consumer will definitely return the product. In an industry that survives on such low margins, the product returns might break the company.
However, you could see this function coming in premier TVs where the cost also includes a premium for the advanced technology that the device integrated within it.
Apple TV has not affected us because it is a closed product. To get content you have to sign into the iTunes Store. In our case you have the choice to gain content from us or from any of the other content providers or you could even open a content store yourself. In some ways, Apple TV did a lot of good and bad to the industry.
For a non-techy consumer, they sold the concept that you could take a device and you could attach it to the Internet and it just works. That was the good part. The bad part was that it didn’t seem like a mainstream product for Apple, Steve Jobs even called it a hobby right. So people didn’t attach a sense of failure to that product. But the net of it was positive as it created a lot consumer awareness about it.
Google TV is also very similar. A lot of people from the outside look at Google TV as a failure. Technically, they did a very good job. In the TV industry, what we have learnt is that it is all about user experience. Microsoft has been trying this from 1998, after they bought a company called webTV. If you have designed in your mind to look at the TV as a browsing device, then it’s not going to work in this generation.
TV users do not like a lot of interactivity, this whole concept of witting in front of your TV with a keyboard is very alien to most people. TV watching is by far still a passive experience. When GoogleTV came out they focused on the integrated search experience – you could search for content from the Internet or the cable operators- it was technically impressive but there was a huge change in the user experience. I personally don’t believe that any change of that magnitude will happen very quickly.
Q. What is VuNow?
VuNow is the name of our complete platform. You have got to understand that we are not just a box company. Even though there is a significant amount of IP in the box, it also talks to a head end on the Internet. So this whole cloud service that manages the content completely comes from us. The whole system is called the VuNow Internet TV platform, which is what our customers take from us. They go to end users with different brand names for the box.
Q. Is everything done in-house?
All the hardware development is done in-house. Manufacturing is not done in-house, we outsource it to China and Taiwan. All the software development is also done in-house. Of course, there are bits and pieces of technology that we may have to license from other companies. For example, Windows Media is from Microsoft. So we have to license it from Microsoft to use it.
Q. What were the major challenges that you faced to bring this product to market?
I will talk about the external factors first. It’s a very embryonic market and not a mature market. So entering an embryonic market means you have to face a lot of challenges. For one, we don’t go the consumer directly, so we don’t get the consumer feedback directly. The whole loop of getting it to the customer, obtaining feedback, and then iterating through that and building the right stuff into the product is in itself a challenge. Since the market is also developing – people really don’t know in which direction it might go.
What happened to us was that after we had rolled out the first version of the product, Apple TV was announced. Apple did a lot of marketing for the entire eco system. But they had a different kind of vision. Those people are good at building this into the minds of the consumer right, so when something like that happens it is not necessary that Apple has the same vision as you do. Initially people might tend to follow that, but later they realise that this is not right and then they come back. These things is not easy for a start-up.
The second challenge is the internal challenge. Engineers are so used to working in a certain way, the fact that you are building a whole product all the way from very serious things like deep design and architecture thinking over the long term. Also, the productisation of the product does not come naturally to a lot of engineers.
If you compare engineers in India to those in Silicon Valley, you would see that engineers in Silicon Valley are more customer oriented. For instance, if you do an operation and something fails, you have got to display an error message. People here would say that ok, it’s just an error message. But for a finished product, the error messages are done up very cleanly and it doesn’t confuse the consumer. At the same time it gets you feedback which notifies us of what went wrong and lets us realise what has happened. This is essential for a world-class product.
Q. Is your product introduced in India on a large scale?
Not really, in fact India is one of the few countries where we have lesser penetration. The reason is very simple, this is a product that delivers video over the Internet. So if I want to deliver high quality video over the Internet, I am talking about at least having a 2 Mbps connection. That’s why US and Western Europe is where all the action is right now. Far East obviously. India is developing, so we’ll be looking here at a larger scale soon.
Q. Couldn’t you leverage the 3G connection for your product?
We have an Indian customer who is looking to develop the product, specifically with respect to 3G. They are in serious trials for the last four months. There are still some challenges, for instance it is still to expensive. But from the technology perspective it is already started.
Q. Is there any particular reason for choosing Bangalore for your design house?
Well, I am from Bangalore and it didn’t occur to me to move out from Bangalore. Even if I were to start a company today, I would still base it in Bangalore, because the talent pool here is still far above what you get in other cities especially in our space. Now if you were developing a Web development product, then you would have other options like Hyderabad.
Q. Of your engineers over here, how many are design engineers focusing on the electronic part of the product?
Out of 100 people, our design element for hardware is around 10 percent. The good thing about the hardware side is that if you look at the semiconductor for the devices that we are building, they are very highly integrated semiconductors. These designs today are not extremely complex such that we need a large design team. Most of the complexities are buried in the SoC, and optimizing for power and space. That’s why we have a 90/10 team.
Q. What do you believe got you the award from ISA for the best electronic product built out of India?
The biggest thing which helped us get the award and the initial traction in the marketplace was that we were able to create the product small.
Q. How is your recruitment here?
We have a pretty long recruitment process, so it’s not easy to get in. We never hire freshers, and because we have a shortage of time we usually use consulting houses to bring people in instead of making a hiring mistake. The challenges that a start-up company would face is that since we don’t have a brand, there is social mindset problem. We have had cases where once they were selected, the parents had to agree and then the uncles had to agree and so on. The key differentiator for us is that when someone comes to work, they should look at it as not just another product.
Q. Are you focusing on one product only?
The industry is progressing, so our next step is that we give the device to the content provider and operator who already have the content. If content is already available for the platform, our next step is to license to gain content ourselves. Initially we used standard def content but now if you don’t talk HD you are not in the Media business. So now we have full HD support with 1080p platform. And we are also looking at several things to enhance and a companion product which would be launched in mid 2012. We are currently in the process of licensing content.
Q. Could you explain this product that is in your pipeline?
Today if you have multiple TVs, then you would need one box for each TV. What we are working on is one central device that will incorporate several functions and will stream directly to TVs and also function as a gateway.
Q. Who are your competitors in India?
There are a lot of people who are doing similar things to what we are doing, but if you are asking me if I face competition on making a deal then no we don’t have any.
Q. What is your turnover?
It’s a VC-funded company so I will not talk about revenues but from an investment perspective we have raised around 17 million dollars.
Q. Do you plan to increase the number of hardware design engineers?
The next product that I was talking about earlier is far more complex and so obviously everything will go up and there will be a lot more hiring.
Q. What kind of engineers would you be looking at?
From hardware perspective we would need someone who has some experience with media processors and some expertise on the RF side. Beyond that, we need people who are familiar with designing 8 layer or 10 layer boards. Again there we need someone who is experienced with RF and signal noise.
Q. Is there any average year of experience that you are looking at?
Our current team has an average experience of 9 years so we would not be looking at anything less than 6.
Q. Do you outsource any solutions?
Not the design process, we only outsource the manufacturing process to China and Taiwan.
Q. Do you have international customers?
The OEM model is that the company may be US based but they sell all over the world. For an instant, NetGear is US based but they have 4000 stores all over the world and so it’s a little hard to track.
Q. What is your revenue model?
We’re not selling just the device but the whole platform. We basically sell the hardware or we give them a manufacturing license to build from our manufacturers. In either way we get hardware revenue. On the content side it is a revenue shared model. So a large portion of the revenue is kept for us and the content provider. If someone wants to license the whole platform, then it’s a different model.
Q. What kind of marketing do you use?
We have a marketing team in the US. They participate in industry trade shows and work with other eco-system partners to market our solutions. We also have channel distribution partners who do part of the marketing.