A most ambitious...................
Samsung and 3DO cancel MSP project -- Revised deal ditches rollout of Multimedia Signal Processor
by Junko Yoshida
San Jose, Calif. - Samsung Semiconductor Inc.'s much-publicized Multimedia Signal Processor (MSP) project is dead, the victim of an aborted joint-venture deal between Samsung's South Korean parent and 3DO Corp., EE Times has learned.
The two had teamed up earlier this year to form a venture through which Samsung's MSP design team and 3DO's hardware-engineering team-which was to be divested by 3DO-would complete the MSP design and pursue applications development. The venture also was to have completed 3DO's 128-bit videogame-platform hardware architecture (see Feb. 10, page 29)
Early last week, however, 3DO and Samsung Electronics Co. Ltd. announced that plans for the joint venture had been dropped in favor of a simplified arrangement. A 3DO executive confirmed to EE Times that MSP had met a like fate.
The new terms call for Samsung to purchase 3DO's hardware systems business for approximately $20 million in cash. Samsung will leverage that acquisition to form a Silicon Valley company that will concentrate on multimedia systems and semiconductors.
Approximately 75 people currently employed by 3DO's hardware-systems business will be offered positions in the new organization, which will be ruddered by Toby Farrand as president and chief executive officer. Farrand moves into the post from a position as 3DO's senior engineering vice president.
Farrand confirmed last week that the completion of the MSP project is not on the new company's agenda. Samsung did not return calls by press time.
The yet-to-be-named subsidiary will develop multimedia systems and semiconductor products, according to a 3DO statement. The Samsung unit will also assist 3DO as a subcontractor for the completion of remaining contract deliverables due under 3DO's M2 technology license with Matsushita Electric Industrial Co. Ltd.
Close to half of the 55-member MSP development team has already left Samsung, sources close to the company said. MSP-development activities at another company, identified only as a major industry player, have also been canceled, sources said .
Samsung has had its share of problems with the MSP project. The company reportedly had trouble hiring experienced senior engineering management in Silicon Valley; the MSP hardware- and software-development programs had proceeded without oversight from a vice president of engineering.
The processor's development schedule slipped. That prompted Microsoft Corp., as leader of the Talisman 3-D PC graphics project, to shift to Philips Semiconductors' TriMedia group as a processor partner for Talisman.
Despite the setbacks, Samsung engineers reportedly had completed 60 percent to 70 percent of the development work for MSP. "That includes everything from hardware to applications software, tools and system software necessary for MSP," said a source with intimate knowledge of the project.
What we have here . . .
The failure of the initial deal reflects the negotiating parties' initial failure to communicate, sources close to the 3DO/Samsung arrangement said. Samsung had seen the joint-venture proposal partly as a way to get the MSP program properly staffed and get it finished-"to kill two birds with one stone," as one source close to Samsung put it. 3DO, for its part, saw an opportunity to complete its unfinished 128-bit platform.
Yet, sources said, the two sides neglected to reconcile their agendas face-to-face before entering the agreement. Further, they bound themselves to a strict deadline for finalizing details. If the deal fell through, Samsung would pay a severe penalty to 3DO, which promised in turn to negotiate with no other companies.
"They literally handcuffed themselves together," a source said.
Some sources said 3DO had little interest in Samsung's MSP from the start. Asked last week whether that was so, Farrand said, "I try not to fall in love with an architecture. My interest in MSP was to a degree that it could find its applications and solutions for products our customers want to build."
He added that there may be more efficient ways than MSP to deliver digital-video solutions. The new Samsung subsidiary will target solutions for DVD and other consumer-electronics products, such as gaming systems.
"There are lots of fabless chip companies already pursuing the home market by riding the wave of home PCs. But we've decided to start our business from the consumer-electronics space, where both of our companies' strengths exist," Farrand said.
It took the two companies several months to come to that decision. Negotiations on the joint venture began in the fall, when 3DO announced the plan to divest its hardware-engineering team as part of a restructuring. As the talks dragged on and the MSP schedule slipped, members of Samsung's MSP team, demoralized and pessimistic, began leaving the company.
"Meanwhile, 3DO already has its core ASIC designed and working," said one source who will be working for the new Samsung subsidiary. "The new company, with a fresh focus on consumer electronics rather than PC graphics, decided not to take the risk of pursuing MSP."
The companies thus slogged their way to last week's deal. Once the arrangement was recast as a technology purchase rather than an equity-partnership agreement, "we were able to complete the deal within four weeks of discussions," Farrand said.
According to 3DO, under the terms of the Samsung deal, certain physical assets of 3DO's hardware-systems business will be sold; ownership of certain intangible assets will be assigned; and licenses and sublicenses covering certain intellectual-property rights will be granted to Samsung.
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