Western Digital Targeting Cable TV With 3rd Subsidiary

Seeking new markets for its dwindling data-storage business, Western Digital Corp. said Monday it created a subsidiary to provide digital recorders to cable television companies.

The new product, a high-tech substitute for videocassette recorders, would allow cable companies to give customers the ability to record up to 30 hours of television programming.

The Irvine company said it also has reached an agreement for its new subsidiary, Keen Personal Media Inc., to develop its digital video recorder software with and license it to Scientific-Atlanta Inc., a Norcross, Ga., maker of digital set-top boxes.

Keen is the third subsidiary to be launched by Western Digital, the world’s third-largest disk-drive manufacturer, and Keen is the first to focus on the delivery of television entertainment to the home.

Long battered by a brutal pricing war, Western Digital has launched new units as a tactic to increase its market share.

The subsidiary is searching for equity investors to get more operating capital, its president, Russ Krapf, said.

Keen’s product has built-in software that will enable the machine to distinguish among users and to learn each one’s preferences. The program can hold profiles of up to six users, recording what they ask and recommending new programs.

By next year, the recorders will be able to record up to 60 hours of television, Krapf said. Because of its interactive nature, the software can be used to deliver customized advertising based on the user’s personal profile.

“You can tell it to look for soccer games, and it will automatically record them for you,” Krapf said. The software learns that a user is not just a sports fan but a soccer fan and can record matches whenever they are on.

The digital video recorder is meant to work together with cable set-top boxes, which provide customers about 200 television channels. Initially, the recorder will be sold as separate components, but the intent is to build them directly in to Scientific-Atlanta’s set-top boxes.

Keen will have the stand-alone recorders available in December, Krapf said.

The combined set-top box product, which will be sold by Scientific-Atlanta, is expected next year.

Competing products by TiVo Inc. in San Jose and ReplayTV Inc. in Mountain View, are sold in retail electronics stores, but Keen’s products initially will be offered only through the cable companies themselves.

Krapf has been with Western Digital for three years. Keen, which has 37 employees, will soon move from Western Digital’s headquarters to a separate facility in Irvine.

Western Digital stock price rose 6 cents a share Monday to close at $5.63, while Scientific-Atlanta rose 25 cents to close at $53.38 a share, both on the New York Stock Exchange.