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As the TV market shifts, Hillcrest Labs may find its spotlight moment

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The blueprint for Hillcrest Labs began as more of a map. Founder Dan Simpkins assembled a tech-minded team in 2001 to plot how consumer technology habits might evolve over the next decade and how that would impact the market.

They eventually came away with the idea that as the number of television programs multiplies, the practice of surfing channels with remote buttons would fall flat. TVs would need to be more interactive.

“Then we placed the bet,” Simpkins said.

It’s been said that it is the innovator’s job to fill a need. But every start-up launches with blind spots. Markets shift unexpectedly. Disruptive technologies emerge. Money runs out. The result is a minefield of challenges that make business a gamble.

Hillcrest placed its wager on what would eventually be called “Freespace,” a point-and-click technology for remotes to control a TV the way a mouse controls a computer. The viewer’s hand motion guides the cursor and the push of a button makes a selection.

In the 10 years since its formation, the Rockville-based business has endured its share of setbacks. But Simpkins and other industry observers say the company may finally be approaching its watershed moment.

The company’s technology is beginning to get in the hands of consumers. The firm has inked deals with manufacturers such as Logitech and LG, both of which have licensed the Freespace technology from Hillcrest to use in some remote controls and televisions.

Among the company’s earliest investors was Frank Adams, managing general partner at Grotech Ventures. He had also backed Simpkins’s previous endeavor, SALIX Technologies, which was sold to Tellabs for $300 million in 2000.

Adams recalls thinking the idea was “so far ahead of its time.” Still, he trusted Simpkins.

“He’s the consummate, textbook entrepreneur. You can knock him down but you can’t knock him out,” Adams said. “He got into the market early, he knew it was early, and he continued to weave and bob to find a spot to get some early traction.”

At first the technology was too new and untested for some companies to bite, Simpkins said. Manufacturers doubted whether the technology could make the transition from computer monitor to television screen.

Then products like the Wii game console sold by Nintendo, which eventually settled a Hillcrest suit for patent violations, made motion technology more mainstream. But companies curtailed spending as the recession began to fester.

“Disruptive change generally occurs much more gradually than people think and often behind the scenes,” Simpkins said.

The company also began developing a television interface that organizes programs and content like applications on a smartphone rather than long lists. Hillcrest has also designed two apps of its own that allow people to access a Web browser or Internet content on their television.

Colin Dixon, a senior partner at digital media research firm the Diffusion Group, said those products have been less successful to date than Freespace remote controls.

“They have a pretty clear market advantage, but the question is: Can they get these remotes to move across the bridge from early adopters to the mainstream along with the television? We’ll have to see how that works out,” Dixon added.

Hillcrest recently raised $5.5 million from existing investors to bolster its budget as it waits for the deals it has signed to generate sustainable revenue. Even so, Simpkins said the fact that the company’s technology now exists in consumer products validates what ultimately began as a well-researched hunch 10 years ago.

“Anyone can walk into a Best Buy store and buy a TV with our Freespace technology inside, and few companies can say they defined a vision a decade previously and survived to see that circumstance exist,” Simpkins said.

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