C-Cube's new chips get with the programmable
By Dean Takahashi
Redherring.com, January 09, 2001
Looking around the Consumer Electronics Show in Las Vegas, all you see are consumer appliances offering tons of functions: video game players with DVDs, satellite boxes that can record movies, and others. One of the ways these system manufacturers are bringing all these functions to the over-stimulated couch potato is by relying on media processors -- chips that can process both audio and video data, which in the past have not performed as well as expected.
One of the companies betting on this type of technology is C-Cube Microsystems (Nasdaq: CUBE), a Milpitas, California-based chip maker that is launching its new Domino media processor family today at the Consumer Electronics Show in Las Vegas.
In the past, these programmable, multimedia-focused processors have fared poorly in replacing cheaper custom chips. Flash back to 1996. MicroUnity Systems Engineering touted media processors for everything from cable modems to set-top boxes, but the company failed to get to market and burned through $200 million in funding. It saved itself from imploding by licensing its technology, but its crater was a big setback for media processing.
THE GRAVEYARD
Other failures included efforts by Chromatic Research and Samsung Electronics. In both cases, the extra cost, programming overhead, and failure to find a true market led to disaster.
Even Philips Electronics struggled to market its TriMedia media processors for years. In June, it spun TriMedia off and is now selling chips to Sony's digital TV division. Equator is also selling media processors to video conferencing equipment makers like Polycom, but it has had to wade through several generations of chips for volume sales to materialize. VM Labs, based in Los Altos, California, also tried to use its Nuon media processors as the heart of a video game console, but it fell years behind schedule and has had to shift to the high-end DVD playback market.
"Most of these efforts were too early because the processors weren't up to the task," says Richard Doherty, director of the Envisioneering Group, a consulting firm in Seaford, New York.
C-Cube's Domino, for instance, could be the heart of a multifunction box that serves as a DVD player, a digital video recorder, a high-speed Internet connection, or as an MP3 music player. The chips, which will sell for under $30, are expected to be used in the products by the fall of 2001, says Bob Saffari, director of marketing for advanced video products at C-Cube.
COMEBACK CHIPS
Other companies pushing the resurgence of media processors include Equator Technologies, Sun Microsystems, NEC, and about a half-dozen others. "The resurgence began in the middle of 1999," says Peter Glaskowsky, an analyst at Cahners Micro Design Resources, a market research firm in Sunnyvale, California. "It no longer makes sense to have a custom chip for every function in a box. It's easier just to have one media processor handle all of the processing tasks."
C-Cube believes it can succeed because of the newfound demand for personal video recording, a technology pioneered by Tivo (Nasdaq: TIVO), which allows people to record live television shows and watch them on their own timetable. Now companies are adding the recording functions to standard cable and satellite boxes as well as the newest DVD players. The boxes would also include high-speed communications for Internet applications.
Unlike other media processors, C-Cube's chip has a built-in codec, which can both play back and record digital video feeds. The codec allows the company to add recording functions to a DVD player, while other media processors like the Nuon only perform functions like DVD playback.
"This is the company's future," said Umesh Padval, chief executive officer of C-Cube. "It required a lot of investment when other companies were failing, but we stayed the course." And thus far, analysts believe that C-Cube has targeted the right market for devices that combine digital recording and DVD playback -- what many believe will be the true replacement for the video cassette recorder.
One thing is for sure: there is so much investment money moving into media processors that it seems clear the venture capitalists will keep trying until someone strikes it big. C-Cube hopes it will be the one. If it can stay the course it is currently on, it may have the best shot of all.
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