Synopsis of modem demand from a COMS report by Morgan Stanley (MS), reducing their estimates. Sounds to me like K-Flex has clearly won the 56K battle and the Rockwell group is slowing the move to standards to increase their recent sales advantage.
MS comments that from research, talking to COMS and competitors regarding modem demand it appears that demand for 56Kbps modems has softened and that some competitors are responding to this with recently reduced prices in an attempt to stimulate demand, while Xircom, for instance, reports that its largely corporate customer base is not widely endorsing 56K, and is opting to take 33.6Kbps or
33.6-upgradeable modems.
MS research indicates that, in addition, consumers are increasingly confused, especially as Rockwell-based products are entering the market with much-reduced pricing (Motorola retail is about $99 and Hayes is $119). They believe that at the heart of the matter there are no standards between the X2 protocol and the K56Flex protocols.
They state that this week, Ascend Communications (ASND) indicated that it not be out of the realm of possibility that, with K56Flex access concentrator sales exceeding X2 sales recently, that K56Flex partners may "dig in their heels" and slow down the standards process.
MS mentions that Rockwell filed suit against Bay Networks charging that it had breached its K56Flex licensing agreement, stating, "We have been trying to resolve this issue with Bay Networks for quite some time and are disappointed that we now must ask the court to enforce the terms of our K56flex licensing agreement," adding
further that, "We believe litigation of this sort is yet another unfortunate consequence of the delay in the deployment and approval
of a global 56Kbps modem standard."
MS says COMS is on the other side of this standards dilemma with X2 protocol and its apparent strategy to force others to license the X2 protocol, using as leverage its licensing of the "Townsend patents."
MS observes that the "thrill-seekers" or "early adopters" have purchased their modems earlier this year. Now, in general, the more mainstream-oriented users are confused, and corporate buyers are sticking to their tried-and-true methods of waiting for standards.
MS states that COMS public position is "pro-standards" in all of its press releases, but they observe little progress being made towards standards, and that although a January 1998 ITU standards body meeting date is set, 3Com's feedback thus far is that the K56Flex camp is not cooperating. |
