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(photo credit: Bloomberg)
The digital future is now. The technology exists to allow a complete digital video experience, over the network - meaning that at home, you'll be able to build your dream digital entertainment system, with TV and movies delivered to your networked TV (via your HD entertainment system). You don't need DVDs, and you don't have to fuss with the cable or satellite box anymore.
Yes, indeed, the technology is here - but the reality of the fully wired high definition entertainment experience still seems to many a distant dream, at least based on the way it's been progressing. But it's not technology that's holding things up; it's the political economics that's preventing what could be the biggest thing ever in home entertainment move forward.
"Until content providers are assured that the billions of dollars they have at stake is going to be protected, they are going to be very reluctant to move forward," says Gal Salomon, CEO of Israeli startup Discretix. Which means that in a sense, Discretix isn't just in the business of protecting data and content, both for users on personal devices, and for content providers. It's in the vanguard of promoting the digital revolution.
DRM - digital rights management - is really just an outgrowth of Discretix's main business, which is designing chip-level protection schemes for personal digital devices. When you can't play a video on a handheld device without a proper license, chances are that Discretix (one of the two biggest companies in the world providing integrated content protection) may have had something to do with it. While most people identify DRM issues with music in MP3 format, that market is small potatoes compared to what's at stake in digital video, says Salomon.
"Content providers try to create a community of media consumers, whom they know are interested in their content. But in order to create that community you have to have some authentication system, one that content providers know won't be broken easily.
"Our solution completely integrates security into the device by building it into the hardware, and that's something that can make content providers feel confident that they won't be sharing their valuable content with the rest of the world for free," he says.
But more important for most users is protecting their own content - messages, schedules, phone numbers. With open systems, such as the Linux-based environments being used on more cellphones, comes a greater ability by hackers to write their own rogue applications or routines that can be delivered to devices when a user surfs to the wrong website or opens the wrong SMS. Digital devices are, in essence, sitting ducks - and Discretix also provides protection against those threats, as well.
"We've all heard stories about how users lost flash drives with sensitive information," says Salomon. "With Discretix's data protection platform, the drive is useless to anyone who can't supply the authentication information, and the system can't be bypassed."
And because the digital world is so interconnected, with devices able to nearly instantly share information and data with the rest of the world, an effective protection scheme is essential not only for continued development of the digital video market, but also for the development of better and more popular devices.
"It's all about device security and content management, especially given the ability of data to move quickly in digital format. Without appropriate protection for both the content provider and customer, neither digital media nor digital device development are going to move forward," says Salomon.
The protection Discretix provides differs from the usual, application-based authentication systems used in many older devices and on computers; Discretix protection schemes are built into the device - most of which use flash memory - and are an integral part of it, meaning that attempts to disable the protection system would entail removing a chip soldered into the device, probably disabling it altogether.
"It's a lot more difficult building protection into chips for small devices, because you have a limited space to work with and keep the price down," says Jacob Greenblatt, chief strategist at Discretix. In fact, Discretix has developed a security platform strictly for flash devices (called CryptoFlash), which the company says is "a driving force behind the expansion of flash memory into new markets and applications."
While personal media devices have been hot for years - take cellphones and MP3 players - it's the iPhone that has completely turned the device industry on its head, given the Apple device's impact. Manufacturers who make devices for digital content are all busy working on updates and innovations to be included in future products - and as Apple knows, people are willing to line up for a cool device even when the economy isn't so hot. Discretix had a good year in 2008, with revenues increasing substantially, says Salomon - but with the worldwide recession, Discretix is prepared for the possibility of a tighter market.
"Fewer people will upgrade, preferring to keep the devices they already own," says Greenblatt.
But Discretix is in it for the long haul. "One reason there are so few players in this business - besides ourselves there is a large US company that works in this area as well - is because the turnaround time is long, upwards of two years from design to manufacture," says Greenblatt. Since Discretix designs its protection schemes on the chip level for integration into devices at the early stage of design and development, manufacturers require a lot of testing and tinkering of the system, to make sure it works seamlessly with the device, and fits in with its design and use philosophy," he says.
Despite this, says Salomon, forecasters say that well over a billion cellphones - and almost as many flash memory chips - will be sold in 2009. Slowdown or not, "it's still a great opportunity for us, because those and many other devices need security - and we intend to keep growing and shooting for stars in 2009," he says.