Bernard is right (as usual, in my experience)-the primary upstream modulation scheme chosen by the 802.14 committee ( and in the process of being detailed by DOCSIS) is the updated version of the current Broadcom approach. The S-CDMA approach is included as an option, and was done in order to get enough votes to pass something as the standard (no-one wanted a stalemate to occur). Whether anyone ever uses S-CDMA or not remains to be seen, but the clear winner was Broadcom, in spite of the spin put on the results by Terayon. This will not be the end-game in any event, however, as work is already under way for further advances in upstream modulation. At the SCTE conference last month AT&T stated that they are creating their own higher-capacity upstream modulation technology (widely believed to be a multitone approach) and are looking at upgrading the plant to support return channels in the 900 MHz to 1GHz range, where the noise characteristics would presumable be quite different.
On the second point, where does your confidence in their ability to become profitable come from? They did turn in a positive gross margin last quarter (barely-a whopping 3% I think) as a result of replacing the FPGAs in the modem with an ASIC, but since the GM on the head-end equipment is 60%, Bernard is again correct that they must still be stapling several $20s to every modem they ship. Their only hope of increasing the GM is to have further cost reductions outstrip the inevitable price declines, and I don't know of any consumer product where that has consistently happened. How do you expect them to accomplish this (they won't have the next integration milestone, an integrated RF frontend, until at least Q3, for example)? The best hope for longs is that there is some truth to the Lucent acquisition rumors. As for myself, I am looking forward to Tuesday when the options trading starts. |
