Yes, I'm pretty happy about that. In addition, looks like this company's technology will be used in CPQ's upcoming home networking PC offerings...
John
From Microsoft to Intel, PC Titans
Bet on Funky Tut for Networks
By SCOTT THURM
Staff Reporter of THE WALL STREET JOURNAL
PLEASANT HILL, Calif. -- Tut Systems Inc. has an idea that could
change the way people use home PCs, and some computer industry titans
are lining up to help it.
Tiny Tut knows how to use phone wires to link several PCs, creating a
network within a household. Tut calls the technology "Home Run," and it
has the potential to be at least a big hit in home-computing: Just ask
anyone who has ever tried the complicated and mysterious task of
connecting two PCs to the same printer.
Compaq Computer Corp., Lucent Technologies Inc., Advanced Micro
Devices Inc. and others are licensing Tut's technology to produce
phone-networking devices for PCs, and a dozen more have agreed to
make it the basis of future offerings. The first generation of
phone-networking modems, priced at less than $100 each, is expected in
stores by Christmas.
Industry titans such as Microsoft Corp., Intel Corp. and AT&T Corp.,
meanwhile, are placing longer-term bets that Tut's technology will be a
powerful stimulant for new computer sales. Those companies and others
have invested $39 million in closely held Tut. Microsoft is its largest
shareholder with a 13% equity stake.
Home-networking is piquing interest among computer giants for good
reason: An estimated 15 million U.S. homes already have more than one
PC. With modems coming to market this winter, advanced users will be
able to link several PCs so they can share the same printer, high-speed
Internet connection, file or even game. When PC makers such as Compaq
start offering phone-networking devices as a standard option as soon as
next year, the market could grow even more.
Fast and Cheap
Ordinary modems, of course, also use telephone wires to shuttle the ones
and zeroes of computer data around. But those modems are relatively
slow, and high-speed modems are expensive. Tut says its technology is
fast and cheap because it works much as Morse code does: reading
signals' duration, not their strength, as other modems do.
Tut isn't the only player in this game. One Sunnyvale, Calif., start-up,
Epigram Inc., is working on a way to move computer traffic over phone
lines 10 times faster than Tut can. And some of the companies licensing
Tut's technology could someday cook up their own phone-line technology.
Ask Salvatore D'Auria, Tut's president and chief executive, what keeps
him awake at night, and he'll recall visions of his licensees" logos. "It's
important to be paranoid," Mr. D'Auria says.
And then there's the threat of competing
technologies: People may end up linking home
PCs using electrical power lines or radio
waves. Intel and Microsoft are also backing
ShareWave Inc., an El Dorado Hills, Calif.,
maker of wireless network technology.
"Those guys are playing all sides of the field,"
says Craig Driscoll of the Yankee Group
market-research firm.
For now, many analysts are giving phone-line networks the edge because
the technology is available and relatively cheap. "For the next three to five
years, the phone line is the way to go in terms of price and functionality,"
says Tony Grewe, business development manager for Lucent
Microelectronics. But he adds: "Wireless in the long term may be the big
winner."
Tut says its technology will work with any type of home computer. But the
first generation of devices will work only on Windows-based PCs -- a far
bigger market than Macintosh users. Companies have in the works some
Mac-compatible products that are expected to follow the PC-friendly
versions to stores, probably next year.
Enthusiasm for phone-line networking has propelled Tut toward an initial
public offering of stock. It has registered with the U.S. Securities and
Exchange Commission to sell as many as 2.875 million shares, priced from
$14 to $16 each, in an offering originally slated for last summer. Following
recent turmoil in financial markets, the company has the IPO plans on hold.
Despite its big idea and roster of rich corporate backers, Tut faces an odd
identity problem. It is best-known for its phone-line network technology,
yet it decided long ago it wouldn't get rich making a tiny piece of a chip or
a card that slips inside an inexpensive, mass-marketed computer.
'Black Boxes'
So Tut lets licensees come up with products that use its technology. The
company expects just a small fraction of future revenue to come from
licensing pacts. For its bread and butter, Tut focuses on a far less
glamorous task-selling "black boxes" that route computer data over phone
lines to corporations, universities, and phone companies. "We are a system
company," says Mr. D'Auria. "We sell black boxes. We don't make our
business selling technology."
These days, Mr. D'Auria is especially interested in selling the boxes to
apartment buildings and hotels that offer high-speed Internet access in
apartments and rooms. "We're growing a much bigger opportunity we
think is significant," he says.
Tut lost $6.8 million in the first six months of 1998 on revenue of $4.5
million, compared with a net loss of $3.3 million on revenue of $2.5 million
in the year-earlier period, according to its IPO documents. Since it was
founded in 1991, Tut has lost $36.2 million.
The company was the creation of Martin Graham, a retired electrical
engineering professor at the University of California, Berkeley, and
Matthew Taylor, one of his former grad students. Mr. Taylor, 39, is now
Tut's chairman and chief technology officer, with a 4.4% stake. Dr.
Graham, age 72, no longer has a formal role at Tut but still owns 1% of the
equity.
Dr. Graham is a man who holds 33 patents and uses a Gap shopping bag
for a briefcase. "I work on peculiar problems and come up with strange
solutions," he says. His original name for Tut was Tutankhamon
Electronics, and his corporate slogan was "Ancient solutions for modern
problems." The company no longer uses the slogan.
Robert Frankston, a legendary computing pioneer then working for
Microsoft, was trying to link computers without stringing new wires. At his
urging, Dr. Graham began experimenting on the phone lines in his Berkeley
home. "Tut had a reputation for pushing bits faster over [phone] wire than
was commonly thought possible," Mr. Frankston says.
It took Dr. Graham three months to figure out how to move information
over phone lines at one megabit per second -- roughly 17 times faster than
typical modems did. His solution for encoding computer signals has more
in common with World War II radar systems than with modern data
networks.
Tut breaks other high-tech stereotypes. The youngest member of the
management team is the 35-year-old vice president of marketing. The
43-year-old Mr. D'Auria, a veteran of the Peace Corps, Hewlett-Packard
Co. and a software start-up, joined Tut in 1994. He says the management
lineup reflects his preference for people who can straddle the "new" world
of computer communications with the "old" world of telephones. |
