Ya'll hear that giant sucking sound? It's all of our February calls
getting pulled right down the commode.
NEW YORK -(Dow Jones)- Modem-market leader U.S. Robotics Corp.
appears to have hit a temporary snag in its mad race against Rockwell
International Corp. to market speedier modems.
The new modems allow computer users to receive information at 56,000
digital bits a second, compared with the currently common rate of 28,800
bits per second.
U.S. Robotics hasn't yet shipped its next-generation 56-kbps modem to
retailers although they were supposed to have hit stores Sunday,
analysts said. U.S. Robotics confirmed it is still testing the x2 modem
technology.
Shares of U.S. Robotics closed off $1.68, or about 2%, at $60.3125 in
Wednesday trading.
"Of the large retailers I've called, none have had the new modem,"
said Principal Financial Securities analyst Jeffrey Baker. "They were
supposed to be there on Sunday, and mailers were already printed up in
Sunday's papers."
The Skokie, Ill., concern said it's working with trial customers to
make sure it has the highest product quality. "This is the normal
process we go through when launching breakthrough technology," the
company said.
U.S. Robotics was said to have had a six-month lead in bringing the
technology to market. But Rockwell recently said it would start
mass-producing the new modem this month and that it could be in stores
next month. Rockwell plans to ship up to four million chip-sets by June.
The delay from U.S. Robotics "is a big deal from the standpoint that
about a month ago, everyone thought U.S. Robotics had a six-month window
over Rockwell, and now it's about 30 days, and possibly shorter," said
Baker. "But the company has a history of not putting out a product until
it's completely operable. They have a good reputation for quality,"
Baker said.
Last week, two companies said they sued U.S. Robotics for alleged
trademark and patent infringement.
Motorola Inc. said it sued U.S. Robotics for patent infringement. The
suit came one day after Motorola settled patent litigation with Rockwell
and agreed to cooperate with Rockwell on developing the higher-speed
modems.
In an unrelated case, Pilot Pen Corp. said it filed suit against
U.S. Robotics, claiming U.S. Robotics' popular personal digital
assistants, Pilot 1000 and Pilot 5000, infringe on the pen maker's
trademark.
At the very least, the suits and the delay will be a distraction for
U.S. Robotics in the battle with Rockwell. When the two ship their
56-kbps modems they will be aggressively vying for a market estimated at
more than $5 billion a year. With computer users frustrated by
downloading delays, analysts expect 56-kbps modems priced below $200 to
dominate the market more quickly than any previous advance in
computer-transmission speed.
The problem is that the two companies have different technologies
for making the leap. Without a compromise between modem makers, computer
users with U.S. Robotics modems won't be able to connect at the full
56-kbps speed with modems made with the Rockwell chip. The two modems
will be able to hook up at 33-kbps and slower, and to connect with
lower-speed modems. But the makers of modems and PCs risk confusing
their customers and dividing them.
Both companies are lining up allies for their cause. Rockwell is the
leading maker of computer chips for modems. Rockwell sells its
technology to dozens of modem makers and its chips are also used in
modems made by Ascend Communications Inc., which provides
industrial-size modems to Internet providers, and networking-equipment
giant Cisco Systems Inc. Lucent Technologies Inc., another major
modem-chip maker, has agreed to make its 56-kbps technology work with
Rockwell's.
U.S. Robotics, with a market share of about 25% of the units sold in
North America, will market a $60 software to upgrade modems it has sold
since last summer. U.S. Robotics, which bases its products on chips from
Texas Instruments Inc. and its own software, says its modems can be
adapted with software alone to whatever standard is eventually set.
Courtesy of....
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