Epigram Makes Fast Moves To Net; Will Others Follow?
Date: 2/22/99
Author: Michele Hostetler
Epigram Inc. Chief Executive Jeff Thermond has a demanding customer - his 12-year-old son, Michael.
Michael wants faster Web access on each of the three PCs in the Thermond household, and he doesn't want to wait in line. But Dad doesn't want to shell out $400 apiece for high-speed modems or get three phone lines. Dad thinks the answer is in home phone-line networking, or connecting multiple PCs in the home to a single modem via conventional phone jacks.
That may sound easy, but such products on the market today are too slow for serious Internet users, the elder Thermond says. So Sunnyvale, Calif.-based Epigram is stepping on the gas before the car is out of the pits. The company has technology that will shoot data through at 10 megabits per second - 10 times faster than current offerings.
Products based on Epigram's technology are due this summer and are set to cost about $100.
''Or as Michael says, 'Five months to go, Dad,' '' Thermond said.
A 3-year-old company, Epigram is racing to have its technology become the standard for home networking. Epigram has done the most to advance 10-megabit home networking, analysts say. It's all the company does.
It's also quite a gamble. While the Thermonds seem raring to go for this form of high-speed home networking, the rest of the world has a lot of catching up to do. Home networking products that use phone lines just now are hitting the market at 1-megabit speeds, and it's unclear how well they'll be received.
The market has potential, though. There are 18 million U.S. homes with multiple PCs, says market researcher Dataquest Inc. Along with sharing high-speed Internet access, networking also could hook several PCs to a single printer.
Phone-line networking is gaining attention as an alternative to stringing long cables to link devices. People just plug their computers and other devices into a phone jack equipped with an adaptor, and they're connected. The gear works on a different frequency level so it doesn't interfere with regular phone use.
Epigram supplies chips for the box that connects to one PC and enables the other machines in the household to network via phone lines. Thermond estimates the market for the chips will be $500 million by 2001.
Still, it's not a sure win. The market is new and Epigram has challengers to become the de facto 10-megabit standard.
Many home networking players are using Tut Systems Inc.'s 1-megabit technology. The company went public earlier this month and is testing 10-megabit speeds. Other phone-line technology competition uses a home's electrical wiring to connect PCs.
But Epigram's faster approach is taking hold. Big technology players such as Cisco Systems Inc., 3Com Corp., Northern Telecom Ltd.'s NetGear line and Texas Instruments Inc. have licensed Epigram's technology.
''Epigram is the leading contender for the faster technology, which is 10 megabits,'' said Tom Werner, 3Com vice president and general manager of its local-area network division. ''We're very bullish about Epigram's technology.''
3Com is using Epigram's gear to help it get to market faster, Werner says. Products based on Epigram's 10-megabit chips are expected to be out in the third and fourth quarters. By year's end, Epigram plans to debut chips that move data and video at 100 megabits, says Thermond.
That's what other companies are planning their strategies around.
''We don't believe that 10 megabit is going to last too long,'' says Patrick Lo, vice president of NetGear. ''It's still too slow. One hundred megabit is the way to go.''
Epigram needs to have its technology become the standard for the Home Phoneline Networking Alliance, says Karuna Uppal, analyst with the Yankee Group. A standard is due by August.
The alliance's members, such as Intel Corp., could be invaluable to Epigram.
''That's really the key to their success,'' she said. ''Large (alliance) members can make things happen for a company like Epigram.''
The Internet will be the clincher because people want faster access, Thermond says. The more people and PCs in a home, the greater the desire and the more users fighting for access.
''The only thing that really gets people off the sofa to drive down to Fry's is the ability to access the Internet,'' he said.
Prime home networking candidates have two to three PCs, earn more than $75,000 a year and use the Internet at least 10 hours a week. Small business is another opportunity for phone-line networking, Thermond says. In the past, it cost too much and was too disruptive and complex to network small numbers of users.
But now small business, coupled with consumers who have a growing appetite for bandwidth, should help the market develop, analysts and companies agree.
''Short of the catastrophic meltdown of the Internet ... or something more enticing than PCs coming along,'' Thermond says, ''I think things look pretty good.''
(C) Copyright 1999 Investors Business Daily, Inc.
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In a nutshell:
It will be interesting to see how the 1-10-100 mps race for the home network market share plays out. I 've followed Tut since November and posted on the older Tut thread. This newer thread is the one that got the critical mass and is now the dominate discussion. The same can happen to companies first to market, they get bypassed by newer competitors. The future looks great for Tut and Epigram. If any of you have read the gorilla game this is an emerging technology that will eventually enter an area of hypergrowth aka tornado. There are several outcomes: 1) a company will out-execute its competitors and establish hegemony much like CSCO, MSFT and INTC have done or 2) several strong companies reach a stalemate e.g. the PC desktop market DELL CQP.
The key differentiator between 1) and 2) is will this mass market for home networks involve a proprietary standard?
You can get excellent returns in #2, just look at DELL but the if a company can evolve in #1 and come out on top it gets better.
We'll have to wait and see with tuts, mean time let the games begin.....
GG primer gorillagame.com
regards,
Denis, note I have no position in tuts but maybe soon.
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