Broadcom, C-Cube Join Effort To Provide Full STB Solutions -- Driven By Convergence Of Video, Broadband
Bruce Gain
01/29/2001
Electronic Buyers' News
Copyright 2001 CMP Publications Inc.
The convergence of interactive video and broadband communications was underscored last week when communications giant Broadcom Corp. and video-IC pioneer C-Cube Microsystems Inc. disclosed separate plans to extend beyond their core businesses to deliver set-top-box (STB) solutions.
Looking to design chips and peripherals for next-generation STBs with features like video-on-demand and interactive-television services, the companies are part of a trend toward the cross-pollination of video processing and communications.
After entering the communications market late last year with a combined cable-modem/codec-chip solution for STBs, C-Cube told EBN recently that it will expand its broadband offering for home networking by entering the DSL market this year.
Motorola Inc. has picked a video processor built by Irvine, Calif.-based Broadcom for its next-generation STB, which contains 3D graphics derived from Broadcom's acquisition last year of Stellar Semiconductor. In fact, amid high customer inventories and a slowing PC sector, Broadcom said a combination of its broadband chips and newly acquired video processing technologies will see substantial growth in the STB sector.
"The most significant financial event that'll happen in the [cable-modem and STB] market is really the transition from broadcast-only to interactive," said Henry Nicholas, the company's president and chief executive, in an interview with analysts last week.
Meanwhile, C-Cube, Milpitas, Calif., is looking to enhance its video-processor technologies through its planned entry into DSL via strategic partnerships or acquisition.
"We're just starting to look at DSL," said Patrick Henry, C-Cube's vice president of marketing and corporate development. "With Direct TV and broadcasting local channels over DSL-and then when MPEG-4 comes along-it's more interesting. Digital gateways and home-media servers are going to become more important in the digital home."
Henry said it's crucial for the video processor to offer OEMs a relatively open architecture to accommodate MPEG-2 for one-way broadcasts and intellectual property protocols for interactivity and streaming video.
But is a single-source supply of video ICs that combine front-end broadband connections what OEMs really need? The answer is that an integrated option will help lower prices, but at the expense of other tradeoffs.
"Whether or not the equipment OEMs use these single-source offerings is a double-edged sword," said Alvin Kressler, an analyst at Kaufman Brothers LP, New York. "While integrated products typically offer a lower cost, take up less space, and use less power, they can lock an OEM to a single source of supply, which can reduce bargaining power on pricing longer term and open the OEM up to supply risk."
For Motorola's Semiconductor Products Sector (SPS), which supplies the Blockbuster Inc. set-top box used in Enron Broadband Services' video-on-demand offering, OEMs are more apt to pick and choose parts from various suppliers while evolving their STBs through software modifications.
"There's a number of them looking at extending their product offerings from the video space, the games space, etc. into this market," said Vernon Reed, manager of strategic and customer marketing at SPS' imaging and entertainment solutions division. "What's out there now is only the tip of the iceberg."
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