[More Bozo T. Clown Supposition About USRX ADSL Plans]
Pat,
Your post entitled "[USRX Suppositions]" asks several questions.
I'll address the preferential TI pricing issue in a later post, but
try to answer your questions here.
1. <<Why would Amati want to make a modem with 56K capabilities?
Wouldn't this be like adding foot-peddals to a Ferrari?>>
In a way, yes. Let's use your analogy, and consider Amati DMT
technology to be the Ferrari. Since DMT technology has been proven
to work reliably in various trials, but is not yet widely available
in mass market products, DMT is currently like a prototype
Ferrari race car that can be bought in limited numbers for use on the
race or test track, but is not yet available from a car dealer for
every day use on public roads.
What do you figure a racing Ferrari prototype costs, maybe
$750,000? If so, Amati's sales of the Overture 8 DMT based product
in Amati's fiscal 2Q97 (i.e., the 3 months ending on 2/1/97), which
amounted to $711,000 per the SEC Form 10Q signed by CEO/CFO James
Steenbergen on 3/13/97, are the equivalent of a little less than 1
Ferrari racing prototype.
So how do we get everybody to buy a street legal Ferrari for
everyday use, rather than some other type of transportation, so that
the owners of the Ferrari factory prosper?
The Amati DMT Ferrari makers are diligently testing the prototype
to improve its performance, and Road and Track says that even the
street legal production model will be a screamer if only you had some
place where you could drive 175 mph. The Amati DMT Ferrari factory
has been built, and just as soon as the standard version of the street
legal engine is available from an Illinois supplier, and the
turbocharged version of the street legal engine is available from a
Texas supplier, the plant managers hope to turn out more DMT Ferrari
production models than Michael Keaton in the movie Gung Ho! And when
the Internet Autobahn opens in a couple years, people really will walk
into a Comp USA auto mall with a Ferrari dealership and buy 'em.
Meanwhile, makers of the 28.8 Kbps Schwinn cruiser with foot
pedals would say -- Why buy a DMT Ferrari now, when the Internet
backbone Autobahn is still under construction and you can't use the
speed anyway. Why pay for a Ferrari now? Buy a 28.8 Kbps Schwinn now
and worry about the DMT Ferrari when the ISP/RBOC construction crew
completes the Internet backbone Aoutobahn.
If Joe consumer needs to commute to work tomorrow, does he walk
to work until the Autobahn is open, and save up for the Ferrari?
Maybe, but more likely he and 10 million others buy the Schwinn 28.8
Kbps cruiser with foot pedals and pedal as fast as they can on
whatever roads are already open.
But what does Joe consumer do if Porsche [i.e., USRX] comes along
and says - Joe we realize that you really want to drive an exotic car
in 1999 or so as soon as the ISP/RBOC construction crew finishes the
Internet Autobahn, but have we got a deal for you! For only a little
more than the cost of a standard Schwinn 28.8 Kbps cruiser with foot
pedals, we'll supply you with a Schwinn now, and just as soon as the
Autobahn is open we'll send out a mechanic who will install a Porsche
DSP engine in your Schwinn and make it really scream! Not only that,
but remember that Road and Track article about how great the Amati DMT
Ferarri turbocharged engine is? Well guess what, we buy the exact
same DSP turbocharged engine from the factory in Texas that supplies
it to Ferrari. We pay Ferrari a royalty on each engine, but we're so
big compared to Ferrari, and have such economies of scale, that it
really won't cost you any more than the Ferrari.
In this analogy, who makes more profit, Porsche or Ferrari?
Not clear to me, but it illustrates why some would argue that Porsche
would make more, because each consumer who bought an upgradeable
Schwinn was one less consumer in the market for a Ferrari later, even
though Ferrari received royalty payments for each turbocharged engine.
Now I realize that this analogy isn't perfect, that the Amati
Ferrari factory plans to sell mainly to businesses rather than to
consumers, that the Amati Ferrari designers may be working on even
better non-ANSI compliant engine designs that Porsche can't buy at
any price, etc., but hey, it wasn't my analogy initially. And I don't
know if Amati is geared up to sell product as soon as the TI DSP chip
is available. But I do think it helps to illustrate the point that an
easy upgrade path to future technology can have an impact on which
technology supplier prospers the most.
And if you think this entire analogy is far fetched, go back and
read post #10858 to this thread by Mike Angelo, which contains an
article by Tim Green dated 2/17/97 in Network World. While the
article probably describes "vaporware" (if that term can be applied to
modems), I have no reason to think the article is phony. To avoid
unnecessary duplication, only a partial excerpt follows:
**********************************************************************
By Tim Greene
Network World, 2/17/97
Skokie, Ill. - If 56K bit/sec modems are not wild enough,
U.S. Robotics has something even crazier - a 56K bit/sec
modem with built-in multimegabit Asymmetric Digital
Subscriber Line (ADSL) capabilities.
While it will not be available until mid-1998, the V.Everything
dual modem will only cost $200, the price the company
currently charges for its x2 56K bit/sec modem.
V.Everything will give users an interesting option when they
are in the market for an analog modem but might want to
upgrade to ADSL later.
V.Everything will also let ADSL users take advantage of the
standard analog voice channel that rides the same copper
wires as ADSL. That channel could support dial-up faxing or
access to sites that are not connected via the dedicated
broadband ADSL channel.
For a telecommuter, the price is tough to ignore, said Kieran
Taylor, broadband consultant for TeleChoice, Inc., a
consultancy in Verona, N.J.
''It certainly would make it easier to take the DSL plunge if
you can get the price to that point ..."
**********************************************************************
2. <<In what way is CAP more prevalent and how does a CAP
solution get them into more trials? Please be specific.>>
This was Miclone83's point, not mine, so you would have to ask him.
Since it is my understanding that you are knowledgeable about AOL,
presumably you could e-mail him for more details. As I'm sure you
know, however, Mike Angelo post #13036 answered your question with
specifics about 1996 CAP vs DMT chip sales. I have no idea if Mike
Angelo's numbers are correct, but also have no reason to doubt them.
3. <<While I appreciate your taking the time to analyze the 56K
vs. ADSL scenario at USRX as you see it, your argument has so many
qualifiers such as "perhaps," "it's likely," "probably," "if," and
"might be," I don't know what to make of it. What are you asking?>>
Sorry if my point was unclear. I wasn't actually asking anything.
I was trying to present a plausible explanation for why someone else
had used the term "all relevant standards" (or some term very close to
that) when discussing or writing about USRX's DSL plans. If I recall
correctly, you specifically invited posters in general to offer their
thoughts on what that might mean. Since I have learned a lot from
reviewing the posts by you and others on this thread, I tried to give
something back by offering what I viewed as a plausible explanation,
in hopes that you might find it helpful.
I gave a lengthy explanation of how I arrived at my conclusion, in
part so that you and others could evaluate the analysis for
yourselves. Since I am not an electrical engineer, I hoped others
might be able to point out any flaws in my reasoning. I could have
simply given my conclusion without analysis, but thought that would
be far less useful, especially since I'm a "newbie" around here, and
an anonymous one at that (I do have an e-mail address in my profile -
does that still make me anonymous? I think so.)
My analysis intentionally used many qualifiers, because I have no
knowledge of the terms actually negotiated between Amati and TI, or
between Amati and others. I do have some knowledge, however, of how
technology licensing sometimes works in general. Unless anyone who
posts here was involved in the TI/AMTX negotiations, or has seen the
written license agreement terms, or claims to have been told such
details about the TI/AMTX deal by a reliable source, or can point to
such terms in some SEC filing, I don't think we will have definite,
concrete, black and white answers about the terms of the Amati/TI
deal. I'm still reviewing older posts on this thread as
my time allows, but to date I have seen no references to press
releases, SEC filings, or other verifiable sources of information
providing the actual terms of any of AMTX's announced deals with NEC,
TI, Motorola, etc, as opposed to their existence.
In my first post to this thread (#12498?), I did try to "bracket"
the maximum amount of DMT royalties that could have been received
by AMTX in 2Q97 by process of elimination from the total reported AMTX
revenue stream in AMTX's most recent quarterly report to the SEC. But
hey, what do I know, I'm just a clown.
If you are aware of any place that specific deal terms have been
disclosed, I would greatly appreciate being told where or how to find
them. I do plan to make the follow up call you suggested in response
to my first post (I assume that was an AMTX investor relations dept.
phone #), but need to get a little more educated about AMTX history to
be able to ask more probing questions of them. May have to wait until
after the 4/15 tax deadline, however.
Bozo T. Clown
If you make an investment decision based on a comment by some Bozo,
you have nobody but yourself to blame! |
