Cable modems set to speed Internet access in 1998
PALO ALTO, Calif., Dec 7 (Reuters) - A private startup will this week introduce computer
chips based on a new industry standard expected to dramatically boost the number of
high-speed Internet connections in 1998.
Broadcom Corp, a six-year old privately held company which began in a living room near its
current headquarters in Irvine, Calif., said the new cable modem chips will be widely available in
the first quarter of 1998.
The company's products are based on a new North American cable modem standard and
include both the integrated circuits used in modems used by individuals, and the "head end"
technology used by Internet carriers.
Gerry Kaufhold, an analyst at market research firm In- Stat, estimates the availability of
modems based on the new standard, dubbed MCNS-DCOSIS, will in itself help spark rapid
deployment of high-speed Web cable access.
Cable modems can be made to be up to 1,000 times faster than existing standard phone
modems, according to Broadcom executives, but should begin hitting the streets in the same
$120 to $200 range that existing modems cost.
Broadcom claims an initial lead on the market, and has lined up major equipment makers as
customers including 3Com Corp. (COMS.O), Bay Networks, Inc., (BAY.N), Cisco Systems
(CSCO.O), (Hayes), Motorola (MOT.N), NextLevel Systems and Scientific-Atlanta (SFA.N).
Cable modems deployed this year have been based on proprietary standards, but Kaufhold
projects the advent of a standard will help the market take off, with the number of shipments
growing from 133,000 in 1997 to well more than a million next year and over 3 million in 1999.
Kaufhold wrote in an analysis note Broadcom's role in defining the industry standard with Cable
Labs, a cable industry laboratory, meant that "Broadcom is in the driver seat to ride this
explosive wave of growth as the Internet finally becomes accessible at high speed."
To date, only about 110,000 cable modems have been deployed in North America, many related
to ambitious pilot service offerings by AtHome Corp. (ATHM.0) and its cable industry partners
around the United States and Canada.
Kinetic Strategies, projects the number of two-way cable modem subscribers in North America
to hit 200,000 in the second quarter of 1998 and surpass 1 million subscribers by mid-1999, 18
months from now.
"It looks like the time has come to standardize in cable modems," said Josh Bernhoff, an analyst
at Forrester Research in Cambridge, Mass., who said the advent of standards has overcome a
roadblock to cable access.
Henry Nicholas, co-founder and chief executive officer of Broadcom, said ahead of the cable
industry's trade show in Anneheim, Calif., the company has provided reference designs and
software in addition to the chips themselves.
The three cable modem chips, will be priced at $20 to $30
each in lots of 10,000 or more, and the terminal chips will cost $90 to $175 each in lots of 1,000
or more, according to a price list released by the company.
"We price these so people are compelled (to buy from Broadcom)," he said of the chip products.
The company plans to integrate all three modem chips onto a signle chip to sell at one third of
the three-chip price by mid-1998.
Forrester projects the number of U.S. households accessing the Internet using cable modems in
th year 2001 will shoot up to 7 million, more than double the number of Integrated Service
Digital Network users by then, but this will still capture fewer than one in five Web U.S. users.
Nearly three quarters of users will still be dial-up accounts in four years, according to the
research group.
Broadcom, which employs around 200 people, has been funded largely internally and by
individuals and venture investors. Intel Corp. (INTC.O) and Scientific Atlanta (SFA.N) have
made minority investments.
The company will not disclose results, but industry sources estimate it will post revenues of $35
million to $45 million for 1997 and investment sources have said they expect it to issue shares on
the public market soon.
"We've been profitable. From a cash flow perspective, we don't need to go public to maintain
ourselves," said Nicholas. "The reason for going public (would be) it is a logical step in the
growth of the company."
Competitors include Stanford Telecommunications (STII.O), Rockwell International's (ROK.N)
Rockwell Semiconductor Systems Inc. and Libit Signal Processing.
((-- Palo Alto Newsroom +1 650 846 5400))
REUTERS
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thereon.
nasdaq!
Well, let see by how much I scooped you on this one.<g>
o~~~ O |
