Critics blame the proprietary nature of LiquidHD and Silicon Image's licensing scheme for its slow start.

Silicon Image, a creator of HDMI technology, has become a company everyone loves to hate.

HDMI is the industry's de facto point-to-point interface for uncompressed digital audio and video signals -- now adopted by virtually every new digital TV set launched on the market.

Silicon Image claims that it is the number one discrete HDMI chip vendor today, in terms of units and revenue. Further, the Sunnyvale, Calif.-based company, which is not just an HDMI chip vendor but also an intellectual property (IP) provider of HDMI, is also the fifth largest IP license vendor in revenue, according to the company.

However, every success story in Silicon Valley creates its detractors.

Lucrative HDMI licensing revenues have always been a source of envy for Silicon Image's peers. Rivals have openly complained that a myriad of new versions of HDMI specs and new standards proposed by Silicon Image has given the company an unfair advantage, while fomenting "Silicon Image fatigue" in the industry.

Unlike other chip vendors who weren't allowed into the exclusive circle of HDMI Founders, Silicon Image is in a position to at least partly dictate new features that need to be put into the next version of HDMI specs. Meanwhile, Silicon Image also leaves room for the innovation of their own HDMI chips that are well differentiated from others.

Acknowledging such criticism, Tim Vehling, vice president of worldwide marketing at Silicon Image, said, "We are mindful of that. We need to walk a very fine line."

A big question for Silicon Image today is where to go from here, and how they will be a leader of the networked digital home market while not antagonizing too many potential customers.

There is no shortage of ideas at Silicon Image. Besides steadily rolling out new HDMI specifications (HDMI version 1.4 was launched in June), Silicon Image also launched new standards such as Serial Port Memory Technology (SPMT), Mobile High-Definition Link (MHL) and most recently LiquidHD.

LiquidHD is a comprehensive protocol suite designed for a new generation of digital devices, allowing virtual movie distribution in home and mobile environments.