PALO ALTO, Calif. — They have no receptionist and only paper name signs taped to their office doors, but the 20 employees working out of a nondescript building on a leafy, quiet street here are ready to challenge tech giants in the digital media market.

Led by the man who helped spark a revolution in television by creating ReplayTV, the first digital video recorder, the startup Roku is developing products to make the living room, and not the PC, the showcase for all digital content, from photos to music.

Roku founder and chief executive Anthony Wood knows big-name companies, such as Microsoft Corp. and Hewlett-Packard Co., are already attempting to do the same with so-called media servers or media receivers — devices that allow users to take content stored on their computers and play it on their televisions or stereos.

None of those kinds of products have taken off yet, and the ambitious but soft-spoken 37-year-old serial entrepreneur thinks his latest company can do better.

After a year in secret development, Roku has unveiled its business and launches its first product, the Roku HD1000. It's the first digital media player to be designed for high-definition televisions, which are gaining in popularity as prices drop.

The HD1000 can play slideshows, video or music files from its four built-in memory card slots, or play files streamed from a computer via an Ethernet network connection.

"By trying to establish a beachhead in a large, but rapidly growing market, we could own it, because there's no competition today," Wood said. "It's called getting in early on a trend."

With a price tag of $499, Roku is targeting the high-end consumer, those already spending $3,000 or more on an HDTV set.

In the United States, about 2.5 million digital TV sets — most were HDTV-equipped — were sold last year. That sales figure should double by 2004, according to the Consumer Electronics Association.

"The Roku product is a smart play for the early adopters," said Larry Gerbrandt, senior analyst of the Kagan World Media Group. "This opens up a world of functionality for HDTVs."

Gerbrandt and other industry analysts think Roku could successfully hit a niche market. Whether it could succeed beyond that is up for debate, but Wood's track record of creating cutting-edge products bodes well for Roku.

"Anthony Woods has introduced the right products at the right time, and it looks like he's doing it again with Roku," said Sean Badding, an analyst with The Carmel Group.

Wood named the company Roku because it is his sixth company, and the word means "six" in Japanese.