"C-Cube said Matsushita's JVC and Sony Corp. (SNE) are looking at using the chip in consumer products"
C-Cube Video Chip Seen As Breakthrough For Consumers
By Mark Boslet
PALO ALTO, Calif. (Dow Jones)--C-Cube Microsystems Inc. (CUBE)
Monday unveiled what experts were quick to call a breakthrough in video
recording technology - a potentially low-cost way for consumers to record video on compact disks.
The development could ultimately bring about the antiquation of the tape-based video cassette recorders that most Americans use to record television programming and could trigger the proliferation of low-cost digital recording devices such as camcorders, DVD systems and video-conferencing equipment.
But this consumer-products transition won't occur overnight. Products using C-Cube's new silicon chips won't reach the market in volume until Christmas 1999, at best.
Still, the technology from market innovator C-Cube turned heads.
"It's awesome," said Unterberg Harris analyst Tejinder Singh. "It's like a revolution."
Up to now, consumer products featuring digital recording - such as DVD
recorders - have been too expensive to make. C-Cube's DVx digital video
architecture promises to drastically lower prices by offering one chip that will do what consumer-products manufacturers presently need three chips to accomplish.
The DVx architecture, a combination of silicon technology and software that uses an MPEG-2 compatible video-compression algorithm, should enable C-Cube to cut the price of a purchase that now comes to $1,000 or more.
The company should be able to reach the important threshold of $50 or so needed to price consumer products attractively, said Dataquest analyst Dale Ford.
C-Cube Chief Executive Alex Balkanski told Dow Jones he expects to achieve manufacturing cost reductions within the next 12 months that will bring the price of the chip to between $20 and $30. C-Cube will sell DVxpert chips for high-end professional applications in the meantime, with volume production beginning in the fourth quarter and prices of a couple hundred dollars a chip.
Volume production for the consumer market should kick in during 1999 with the first big selling season likely to be Christmas of that year, Balkanski said.
But by then C-Cube probably won't be the only company pushing a
low-cost
technology. At the same time, success of the DVx architecture also
depends
on industry acceptance, especially that of technologically recalcitrant
Hollywood.
Industry experts said C-Cube likely has a six-month head start on competitors such as International Business Machines Corp. (IBM), LSI Logic Corp. (LSI) and SGS-Thomson Microelectronics NV (STM), which also appear to be working on similar technology.
C-Cube said Matsushita's JVC and Sony Corp. (SNE) are looking at using the chip in consumer products, but declined to name other companies examining the product for consumer applications.
"We think it is by far and away the most important product we have introduced in several years," Balkanski said. "Now we have reached the seminal milestone of a single-chip engine."
Nasdaq-listed C-Cube closed up « at 29 Monday. |
