Perlman, Steve

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Perlman, Steve

WebTV Networks, Inc.


Steve Perlman designed revolutionary new computer products for several companies before forming his own, WebTV Networks Inc. In doing so, he realized his dream of creating a system for using the television to reach the World Wide Web and to operate e-mail. Now many others in the computer, television, and cable TV industries are trying to create similar services.

Personal Life

Steve Perlman was born in West Hartford, Connecticut in 1961. Beginning at age 10, he attended Talcott Mountain Academy of Science and Mathematics in Avon, Connecticut. In 1997, Perlman donated $1 million to the school, which responded by naming its library and technology conference center after him. Perlman graduated from Hall High School in West Hartford in 1979. He went on to earn a liberal arts degree from Columbia University.

Career Details

Perlman's technical savvy enabled him to work during high school, when he stopped going to class in order to work on a minicomputer project for Northeast Utilities. In 1984 he was hired as a principal scientist at Apple. He helped design the first color monitor for the Macintosh computer and worked on QuickTime, an early system for showing video on a PC. During his stay at Apple, Perlman wanted to adapt the Macintosh for use as a television receiver, but the project was rejected. Perlman says that Apple destroyed some of his work, causing him to quit.

In 1990 Perlman became managing director of Advanced Products at General Magic, Inc., developing software for handheld communicators. He quit this job when management sat on what he called "Magic TV." He left the company but retained the rights to this new interactive software. Next, Perlman cofounded Catapult Entertainment, Inc. in 1994, where he was chief technical officer (CTO). He was fired from this position a year later. While at Catapult, Perlman developed the XBAND video game modem, which allowed players at different locations to play together.

Finally, Perlman cofounded WebTV Networks Inc., where began designing and selling the technology he believed in so strongly and became the president, CEO, and CTO of the Palo Alto company. WebTV was founded in June 1995 with former Apple co-workers Bruce Leak and Phil Goldman. At first, the company operated in secret, under the name Artemis Research in an old automobile dealership's garage. Perlman designed the WebTV prototype in 14 months using some $3000 in parts purchased at an electronics store. The product gave an individual access to the World Wide Web and e-mail, using a television, remote control, wireless keyboard, and telephone hookup. This first WebTV model was offered just in time for 1996 Christmas sales and retailed at $300.

In 1997 Perlman unveiled an improved version of WebTV named WebTV Plus. The new version allows cable television customers to have simultaneous Web and television use, with a picture-in-picture display. For example, the viewer can access information on a product seen in a commercial or statistics related to a live sporting event. The new product cost $299 and the older WebTV "Classic" was reduced to $99 with a rebate. Later in 1997, Microsoft purchased the company for $425 million in stock and cash. As was noted in the Wall Street Journal, the purchase was a "vindication" for Perlman, who had finally proved the value of a TV-computer combination.

Perlman's conflicts with his employers have left him with a reputation for being argumentative and uncompromising. He believes that his troubles were rooted in the mediocre minds of his bosses, a situation that he dubbed the "Salieri Syndrome." He is referring to the film Amadeus and the character Salieri, who succeeded over Amadeus Mozart despite his inferior talents. "Apple was taken down by Salieris," Perlman was quoted in the Wall Street Journal.

What Perlman lacks in diplomatic skill, he makes up in technical imagination. Perlman made WebTV possible by making computer images look good on a television set. He found a way to fix color distortion and fuzziness, characteristics that made the television a poor format for displaying text. To do this, Perlman created a software filter called TVLens that corrects flicker, crosstalk (rainbowing), and resolution problems.

Perlman hopes to sell WebTV to consumers who are interested in accessing the World Wide Web and e-mail but are intimidated by the PC or consider it too costly. Perlman saw an untapped market of World Wide Web users—everyone who watches television. For while only 20 million households have PCs with modems, 98 percent of U.S. households own at least one television and some 64 million have cable television. Perlman's inexpensive box and keyboard are manufactured not by WebTV but by licensees Sony, Mitsubishi, Hitachi, and Philips. WebTV sells the customer the connection to its service, which costs $19.95 per month.

Chronology: Steve Perlman

1961: Born.

1971: Attended Talcott Mountain Academy of Science and Mathematics.

1984: Hired as principal scientist for Apple Computers.

1990: Hired as managing director of Advanced Products at General Magic, Inc.

1994: Cofounded Catapult Entertainment.

1995: Cofounded WebTV Networks Inc. as Artemis Research.

1996: Developed WebTV prototype.

1996: Offered WebTV in retail markets.

1997: Unveiled WebTV Plus.

1997: Sold WebTV to Microsoft for $425 million.

Perhaps the most important issue at hand is whether "couch potatoes" want to interact with the television. Some critics insist that people will not give up the passive pleasures of zoning out in front of the television. If consumers do warm to a WebTV-type product, they will soon have several choices. Within the computer and television industries, upcoming products include RCA's Network Computer, NextLevel's DCT-1000, and the Curtis Mathes' uniView 210. Computer manufacturers point out that WebTV's proprietary system does not allow users to take advantage of "applets," new mini-applications that are downloaded from a web page, limiting full-fledged Web use. And from the cable television industry the leading Internet service is WorldGate, which is potentially faster and less expensive than WebTV. This product downloads software to a cable box over a cable system's wiring, which is four times faster than telephone lines. WorldGate is projected to cost $5 to $12 per month—on top of regular cable fees.

Steve Perlman, however, has a good head start on the competition. He has made a long-term commitment to uniting the television and the computer, and his passion for the project is clear. As Stephen J. Luczo of Sea-gate Technology Inc. noted in the Wall Street Journal, "When you meet with him, there isn't a lot of chit chat . . . . He is definitely on a mission. And the mission is to change what it means to watch TV."

Now others are scrambling to join in the convergence of television and the Internet. Even after the first WebTV model was on store shelves for a year, no other competitor had launched a full-scale attack on Perlman's product. This made WebTV virtually the only TV/Internet product available in late 1997.

Social and Economic Impact

Steve Perlman's WebTV can bring the vast information of the Internet to every living room in the world through television. Nearly every American household has a television set, while a minority owns PCs, and even less go online via modem. Since the mid-1980s, Perlman has developed and promoted interactive television. With the booming popularity of the World Wide Web, Perlman saw the potential that his idea held for extraordinary expansion of the online consumer base.

Perlman also demonstrated perseverance and a belief in himself and his ideas that all can learn from. When employer after employer rejected Perlman's ideas for interactive television, he developed it himself. He changed the way many Americans watch television and became a multi-millionaire in the process.

Sources of Information

Contact at: WebTV Networks, Inc.
305 Lytton Ave.
Palo Alto, CA 94301
Business Phone: (650)326-3240


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Hof, Robert D. "Hello, Couch Potatoes." Business Week, 24 March 1997.

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