Cisco as consumer-electronics
player?
To make a splash at consumer show
By James Niccolai
IDG News Service, 12/28/98
When the Consumer Electronics Show (CES) kicks
off in Las Vegas next month, home-networking
products that let users link PCs with other electronics
devices and set-top boxes designed to enhance plain
old television viewing are expected to take center
stage.
At the nexus of the consumer electronics-IT
convergence sits Cisco, which makes many of the
routers, switches and other IP-networking products
that carry Internet content to the home. It should come
as no surprise then that John Chambers, Cisco's
president and chief executive officer, will give one of
the opening keynote addresses at CES, alongside
Howard Stringer, president of Sony Corp. of
America.
"Cisco wants people in the entertainment and
computing industry to understand that they are the way
to get something from point A to point B over the
Internet," said Van Baker, an analyst with Dataquest.
Rumors abound that Cisco will announce it is forming
a consumer division that will market products to be
sold directly into the home. One analyst doubts Cisco
will sell directly to consumers, but thinks the company
might partner with consumer electronics manufacturers
and provide technology that would help them develop
Internet-enabled products, thus boosting demand for
its own products.
"Sony has the access to the consumer market, not
Cisco, so why re-create the wheel when you can
partner with consumer electronics makers to reach the
consumer?" asked John Armstrong, chief networking
analyst with Dataquest.
Organizers say more than 1,800 IT computing and
consumer electronics firms will be on hand at the
show, which runs Jan. 7 to Jan. 10. They will show off
the latest in mobile electronics, home automation
systems, satellite technology, computing, home
networking and entertainment systems.
Many of the products reflect the ongoing convergence
between telecommunications, the PC industry and
consumer electronics, said Roger Gulrajani, Microsoft
Corp.'s group product manager for PC companions
for Windows CE.
"In this confluence companies are asking, 'How do we
extend the information on PCs to new classes of
devices?'" Gulrajani said.
While consumers are traipsing through the show aisles
and gawking at the latest products, IT executives will
be schmoozing behind closed doors with their
electronics industry counterparts, hoping to strike
partnerships and licensing deals that will bring their
technologies to truly mass markets.
Two prominent players in the emerging wireless,
home-networking market, Proxim Inc. and
ShareWave Inc., will both be on hand to show their
latest wares. Home networking is set to move from the
fringes to the mainstream in 1999, one analyst said.
"It seems to be a market that's really beginning to open
up. A lot of the smaller companies we've talked to in
the last year have finally finished their product
development and worked through their bugs," said
John Armstrong, chief networking analyst with
Dataquest Inc.
Driving the market is an increase in the number of
homes with more than one PC, and the availability of
movies, music and digital content on digital video disks
and the Internet, according to Bob Bennett,
ShareWave's vice president of marketing.
ShareWave, a small Silicon Valley startup backed by
Intel and Cisco among others, is among the
forerunners with its wireless broadband technology
that allows consumers to link together PCs and
peripherals like scanners, and to share a single Internet
access point for multiple devices. The company's
software and chipsets, which it sells to electronics
manufacturers, use MPEG compression to give
effective throughput of 120M bits per second,
allowing digital movies and other content to be
broadcast from a PC to a range of appliances around
the home, Bennett said.
At CES, the company plans to offer a first glimpse at
the reference specification for a new type of network
appliance it has designed for the home, Bennett said.
ShareWave won't describe the device yet, although
company literature outlines plans for a "kitchen pad" --
a flat-panel viewing screen that could, for example,
show a DVD movie being played on a PC elsewhere
in the home.
ShareWave teamed with Philips Electronics NV
earlier in the year, which licensed its technology for its
AMBI home networking system. Philips' product is
due to debut in some North American markets early
next year, priced between $500 and $700.
ShareWave rival Proxim, meanwhile, will show its
Symphony networking system for PCs and
notebooks, as well as its wireless Windows CE
technology for handheld computers. Rolled out last
month, the Symphony system includes an ISA card, a
PC Card and a modem.
Proxim and ShareWave also both plan to announce
additional partnerships with electronics vendors at the
show.
Meanwhile set-top boxes will be on display from the
likes of industry leaders such as General Instrument
Corp. and Scientific-Atlanta. Set-top boxes are an
emerging, nebulous class of product that make
television a more interactive experience, often using an
Internet connection that lets users surf the Internet and
shop, as well as look up information related to
programs they are watching.
"This is the first true Internet appliance that will come
into the consumer space," said Dataquest's Baker.
But Baker thinks the buzz at CES will be around two
smaller companies whose set-top box technologies
offer relatively limited functionality. Replay Networks
Inc. and TiVo Inc. both offer appliances that record
television programs based on preselected user
preferences and save them to a hard drive in the
set-top box. The systems have VCR-like controls that
allow users to rewind and pause broadcast
programming.
TiVo and Replay Networks "offer a really logical
progression to convergence because they take a lot of
computer technology and apply it to television in a
manner that is very easy for the consumer to
understand," Baker said. "I don't think it makes sense
to bring more feature-rich boxes to market until
people know what the future wants."
TiVo is busy negotiating licensing fees with electronics
makers that will produce its set-top boxes; a
spokeswoman said it will have licensing deals to
announce at the show. The company is also working
to include e-commerce capabilities into the system,
spokeswoman Nadia Jamshidi said.
As firms like ShareWave and TiVo preen their
technologies for consumer markets, they recognize the
need to strike deals with consumer electronics firms.
Consumer giants like Hitachi, Philips and Sony carry
brand names that users associate with quality and
reliability, according to ShareWave's Bennett. They
also understand ease-of-use requirements and have
channels to distribute products, he said.
"In our segment we think having consumer electronics
support is probably a mandatory requirement,"
Bennett said.
Other products to look out for at the show include
high-definition television sets from Mitsubishi Electric
Corp., Samsung Electronics Co. Ltd., Panasonic
Corp. and others, although pricing and technical issues
mean that the market will take one to two years to
advance, Dataquest's Baker said.
Analysts also expect to see MP3-based handheld
audio systems, which allow users to download music
files from Web sites and carry them around
"Walkman" style, as well as a plethora of digital
cameras, computer games that use surround sound,
smart phones, electronic books, handheld computers
and DVD players.
"I think it's going to be a good CES," Dataquest's
Baker said. "I think there's some good tangible stuff
that's in the market now, or on the verge of being in
the market, that will be compelling to consumers and
at a price point consumers will be interested in -- and
that will be a refreshing change for CES."
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