The Redwood Shores, Calif., company announced on Tuesday that it would be providing next-generation interactive TV software to U.K. telecommunications giant Cable & Wireless plc. The company's bid beat out Microsoft (MSFT) and another set-top software maker, OpenTV. "The deal gives NCI a shot in the arm and gives them credibility," said Abhi Chaki, an industry analyst with new media watcher Jupiter Communications. "It shows that their product is not vaporware." The U.K firm plans to use NCI's DTV Navigator software to deliver advanced content - such as e-mail, programming guide and Web pages -- to its subscribers. The deal chalks up a win for Larry Ellison, president and chairman of Oracle Corp. (ORCL), and his brainchild NCI in the battle against Bill Gates. "We went head-to-head with Microsoft and we won," said Charlie Tritschler, NCI's director of consumer product marketing. The deal not only validates NCI's vision, but vindicates it, as well. Last November, cable provider Tele-Communications Inc. (TINTA) picked Microsoft's Windows CE as the operating system for its first 5 million advanced digital set-top boxes, beating out NCI in the deal. But NCI is not out of the running for future TCI wins. Because the cable company has settled on Java as the interface for applications, the DTV Navigator, which also uses Java, is interchangeable with Windows CE. Even so, the Cable & Wireless deal is big. NCI's biggest advantage was that the company had a product. "We have seen the DTV Navigator up and running," said Ian Mecklenburgh, C&W's head of Internet and new media products. "It is not vaporware like some company's products, so we aren't forced to buy a development plan." Full, interactive TV will not immediately be available, said NCI. Cable & Wireless plans to phase in the new advanced services over the next few years. By the end of 1998, the British company will offer electronic programming services to many consumers, finishing the rollout within a few years, said C&W's Mecklenburgh. In total, C&W can reach about 7 million households with its two-way cable network -- a network that is already ready for the Internet. That compares favorably with the 12.5 million households that Jupiter Communications estimated would be ready for the Internet in the U.S. by 1997. As services develop, truly interactive TV -- melding TV programming with Web content - will become available. The U.K. is far ahead of the U.S. in rolling out advanced digital services and merging the cable and telephone markets. "The U.S. leads the U.K. and Europe in the Internet," said Jupiter's Chaki. "But the U.K. leads the U.S. with its deployment of digital TV. It's happening now." Cable & Wireless Communications, the U.K. subsidiary of C&W that will deploy the first set-top boxes using NCI's DTV Navigator, offers both cable TV and phone services to residential consumers. The British communications companies, such as C&W, are also under a lot of pressure to roll out the new services as soon as possible. Competition from satellite TV providers, such as BSkyB, mean that being late to market could be fatal. "We will see these the deals occur more frequently," said Jupiter's Chaki. More News | ZDNet