New cable modem chips................
news.com
Cable modems to speed
access
By Reuters
December 8, 1997, 5:15 a.m. PT
PALO ALTO, California--A private start-up will
this week introduce computer chips based on a
new industry standard and expected to dramatically
boost the number of high-speed Internet
connections in 1998.
Broadcom, a six-year old privately held company
which began in a living room near its current
headquarters in Irvine, California, 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 in modems used by
individuals, and the "head end" technology in
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 could be up to 1,000 times faster
than existing standard phone modems, according to
Broadcom executives, but should be priced within
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 (COMS), Bay Networks (BAY),
Cisco Systems (CSCO), Hayes, Motorola (MOT),
NextLevel Systems (NLV), and Scientific-Atlanta.
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 that 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 @Home
(ATHM) 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," Josh Bernhoff, an analyst at
Forrester Research, said. He added that the advent
of standards has overcome a roadblock to cable
access.
Henry Nicholas, cofounder and CEO of
Broadcom, said the company has provided
reference designs and software in addition to the
chips itself.
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 single 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 the
year 2001 will shoot up to 7 million, more than
double the predicted number of Integrated Service
Digital Network users by then. However, this will
still capture fewer than one in five U.S. Web 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 (INTC) and
Scientific-Atlanta 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," Nicholas said. "The reason for going
public [would be] it is a logical step in the growth of
the company."
Competitors include Stanford Telecommunications
(STII), Rockwell International's (ROK) Rockwell
Semiconductor Systems, and Libit Signal
Processing (LIBIT). |
