Mike --
Okay, I'll give your arguments my best shot. I'm assuming each point is written hypothetically. In other words, a big "if" could be inserted before each.
<<<<1. xDSL technology is not implemented by the major players (read large carriers for significant sales) at all or not until late 1998 or beyond. That ties up investment dollars into something that is not performing. Amati and all xDSL companies require the carriers to implement this technology in order to make sales. The carriers have lots of concerns right now with deregulation. xDSL may not see real funding money for widescale deployment for a long time. The carriers must carefully consider the best use of money right now. xDSL may not be the best use.>>>
This would be a concern if after the chips are ready telcos here and abroad ordered from other companies and not Amati. So far the only major contract I've read about is the JPC to Alcatel. Since it's a win for DMT and Amati has been hired to help with their chips, I'll set this worry aside for the time being. As for carriers concerns with deregulation, I agree, however, since ADSL is about their only solution for high-speed bandwidth, I see them proceeding no matter what the FCC decides. The fees the telcos are seeking will be worked out over time. For the past decade they've been extracting too much; now the piper has to be paid and they're having trouble finding sympathy from the government or from anyone else. Will carriers decide ADSL is the best use of their money? Well, what do they stand to lose if MCI or Sprint or GTE or some local independent takes their telephony customers because they can't offer a complete package? I recommend you search Bell Atlantic's archives and find Ray Smith's speeches and other BA white papers. I think it's widely agreed telcos have to offer a basket of services in order to keep their customers. If you were CEO of a telco right now, would you turn your back on the only viable high-speed bandwidth solution available? If I see telcos cancelling ADSL trials and announcing other solutions, I'll start to worry.
<<<<2. xDSL is implemented through CAP. Say what you want, but the first large trials and actual small service offerings are CAP based. (This is why I have hedged my Amati stock by purchasing Westell)>>>
I agree CAP will be deployed first but when I have unbiased ADSL engineers from IBM and GTE telling me DMT is superior and that many more existing lines can be utilized because DMT works and CAP doesn't, I don't become overly concerned. I know why CAP is being deployed and I know why DMT will overtake it. Now if by some miracle CAP could be installed in every home around the world overnight----zap! they're in---then they might become a defacto standard and DMT would suffer. But how quickly will the first CAP modems be installed? And how much behind do you think DMT will be? BTW, I've also hedged my bets with WSTL---for every 1 of WSTL I have 70 of Amati.
<<<<3. Amati's version of DMT is not the popular choice. Aware has already been announced with Ascend and PairGain, both major players in the Internet and carrier industry, respectively.>>>
If by "popular choice" you mean ASND and Pairgain have gone with AWRE's DMT, I certainly can't share your concern. I admit ASND and PAIR are both major players but the fact that Amati didn't give its technology away for peanuts doesn't mean its DMT is inferior. Quite the opposite.
<<<<4. Amati does not sell product, only rights to use their DMT technology. How much profit can that really net them? This may be one of my largest concerns. I have friends in the industry developing ADSL product, and the price points they hope to release product with at volume one quantity would blow away anything out there right now - and they do not work at fly by night small companies, but ones everybody knows. I cannot be more specific than this, I consider the information told to me to be confidential. But it does concern me - I do own lots of AMTX stock.>>>
I share your concerns regarding price points and the large companies perhaps stealing market share, but don't discount Amati's ability to sell product nor discount its partnership agreements with NEC and TI. These both include buy-back agreements for product. They also include the sale of Amati's software. Now if Amati doesn't sign a major partnership in the datacommunications field, we may all have more reason for concern. I highly doubt Jim Steenbergen would have said what he did in the Bloomberg interview and at the shareholders meeting if he wasn't close to announcing who they've chosen. When you said "fly by night," who were you referring to?
<<<5. Cable wins over xDSL.>>>
After today's TCI announcement, I have even less reason to be concerned than before, though anyone who's been following the TCI drama all along won't find today's announcement surprising.
I will concede your strongest poiint is the big guys competing and undercutting Amati's prices, but we're a long ways from hearing the fat lady sing. What if the big guys find out their ADSL isn't quite as easy to whip out as they think? And isn't it just possible PAIR and ASND will get what they paid for?
In closing let me say I've watched Amati for a year now and most of my worries have been put to rest. Heck, a year ago we had one partnership, a few trials in place, CAP still threatening to take the US telco market, cable companies pounding their chests with industry projections and glowing press releases, and Amati running out of money and no funding in place. Compared to where we've been, we're on easy street.
I know, we've a long ways to go, but let's keep everything in perspective.
Back to you.
Regards,
Pat
|
