Another bad boy wants his MTV served up consumer chips style:
Rockwell Semiconductor Systems once was to modem chips what Intel
Corp. is to computer processors.
Now, like Santa Clara, Calif.-based Intel, Rockwell is targeting
new markets as rivals chip away at its core business. The unit of
Costa Mesa, Calif.-based Rockwell International Corp. is making chips
for digital cameras, set-top boxes, digital TVs and other emerging
products.
"This is a radical change in our business," said Dwight Decker,
president of Rockwell Semiconductor. "If we achieve our strategy, we
will be recognized around the world."
Decker and Rockwell Semiconductor's five division heads outlined
their strategy last week. Their aim is to make Rockwell a
diversified chipmaker like rivals Motorola Inc., Texas Instruments
Inc. and Lucent Technologies Inc.
Decker estimates the move into new markets will help boost sales
at an average annual rate of about 20%, reaching $3.1 billion by '02.
Rockwell Semiconductor reported sales of $1.6 billion in its fiscal
year ended in September, about one-fifth the parent company's total.
But like its parent, Rockwell Semiconductor has to shed its image
as a defenseindustry supplier, analysts say. Rockwell's biggest
challenge is to create a brand name.
"Rockwell was in the business of building space shuttles," said
Abner Germanow, an analyst with Framingham, Mass.-based International
Data Corp. "Now they are selling to consumers."
In the early '90s, Rockwell quietly seized the market for modem
chips. It held as much as three-quarters of the market, analysts
say. Then came last year's war with Santa Clara, Calif.-based 3Com
Corp. over differing standards for modems that move data at the rate
of 56 kilobits per second, about twice the speed of what had been the
modem standard.
The battle slowed sales for both Rockwell Semiconductor and 3Com,
as consumers either chose sides or waited for a set standard before
buying. "That hurt the industry," Decker said.
Rockwell's share of the modem-chip market fell to about 55% last
year. Much of the gains went to Texas Instruments, which supplies
chips for 3Com modems.
Yet, analysts say the 56K war gave Rockwell valuable experience as
it targets new, consumer-driven markets. Fortunately for Rockwell,
modems are a hot product, analysts say.
"What a great place to cut your teeth," said Geoff Ballew, an
analyst with San Jose, Calif., market researcher Dataquest Inc.
After falling behind 3Com in 56K early on, Rockwell boosted its
marketing, says Moiz Beguwala, head of Rockwell's personal computing
division. The company set up store displays, trained salespeople and
offered special incentives. It gave Super Bowl tickets to retailers
who correctly answered product questions from "secret shoppers" that
Rockwell sent into the stores.
Decker says the 56K experience has reshaped Rockwell's tactics as
it looks to power a new generation of products with its chips.
"We intend to expand this kind of activity," he said. "Clearly,
things like digital cameras and set-top boxes can benefit from
this."
Rockwell's Beguwala points to Intel's Create & Share Camera Pack
as an example of his company's new resolve. The Internet
videoconferencing product, which also uses Rockwell chips, features a
"Connect with Rockwell" logo on the box.
"So even Intel has Rockwell inside," Beguwala said.
Rockwell's plan is to apply its modem technology to other
products. Modems take analog signals from phone lines and convert
them to digital signals, the language of computers. Wireless phones,
consumer electronics, computer networks and cable systems also rely
on both digital and analog signals.
"Our business for 20 years has been digital communications over
analog networks," Decker said. "That heritage is right at the center
of all of these markets."
Rockwell is about halfway through its shift, Decker says. Modem
chips, in their peak year of fiscal '95, accounted for about 80% of
Rockwell Semiconductor sales. This year, the product will account
for about half of sales, he says.
Aside from Motorola, Texas Instruments and Lucent, Rockwell
Semiconductor competes in certain markets against Philips Electronics
NV, Siemens AG and SGS Thomson NV.
With such competition, Decker's goal is clear. "We are not a
(known) brand today, but we will be," he said. |
