Broadcom could benefit big from Epigram buy
By Jim Davis and Wylie Wong
Staff Writers, CNET News.com
July 8, 1999, 2:00 p.m. PT
news analysis When chipmaker Broadcom recently purchased Epigram, it not only
bought a set of technologies for building a home computer networks, it may also
have gained a major competitive advantage thanks to an expected decision from
a technical-standards body.
An international standards organization is set to work with a consortium of technology
companies on a standard for home networking technologies that could eventually pave the
way for broader market availability of PCs, handheld computers, and other devices that can
"speak" to each other over regular phone lines.
Broadcom, thanks to its recent acquisition of Epigram, a provider of technology for
networking PCs in the home via telephone lines, could benefit in a major way.
The Home PhoneLine Networking Association (HomePNA), a consortium of more than 70
companies, will soon announce a new high-speed standard. The technology that appears
to be in the lead comes from Epigram, giving it a leg up for an
international standard as well.
Broadcom plans to build chipsets that combine its cable and
DSL technology with Epigram's technology to create an
all-in-one product. If it's chosen as the HomePNA standard,
Broadcom executives have said they don't plan to charge
licensing fees. The company will compete with other
chipmakers on selling chipsets, said Adam Stein,
spokesman for Broadcom's home-networking division.
In fact, AMD today joined Intel, Lucent Technologies and
others in licensing Broadcom's 10-Mbps technology.
"We'll help them, but by the same token, we'll sell chipsets
until they make products that meet HomePNA's
specifications," Stein said.
It's all in the standard
If Broadcom's technology becomes the standard, analysts believe it will give the company
an early lead by enabling it to release chipsets faster than its competitors.
Broadcom is in good position to capitalize on the home networking market because
consumers will need a device that can distribute broadband signals throughout the home,
whether it is over traditional networks, like Ethernet, or over phone lines, said analyst Greg
McClenon of Preferred Capital Markets. "Their acquisition of Epigram is huge because it
does mean they will have solutions right away," he said.
But because of the intense competition from other chipmakers, it's debatable how long
Broadcom's market leadership will last. "There's a lot of competition and what you'll see is
a lot of PC OEMs will put the silicon right on their motherboards," he said.
Epigram hasn't yet received any formal blessing from the HomePNA. A few companies
have previously stated that they intended to submit a proposal for 10-Mbps technology,
although analysts have said that Epigram had the strongest technology.
The HomePNA plans to work with a standards body, called the International
Telecommunications Union, to create an international method for building high-speed home
networks.
"The idea here is to use home telephone premise wiring because that wiring is guaranteed
to be there and working. The user wants something that they can plug in and use, and the
only guarantee of that is by using telephone wiring," said Ken Krechmer, editor of
Communications Standards Review, a technical journal.
The ITU standard, tentatively called "G.pnt," is expected to build upon the standardization
efforts of the HomePNA.
The current HomePNA standard allows consumers to network their PCs and printers
through phone lines at up to 1 Megabit persecond (Mbps), but the ITU is looking at a faster
standard that would speed data along at 10 Mbps. That's because more bandwidth is
needed to handle large amounts of information from video and music downloads, for
instance.
Cyrus Namazi, president of HomePNA, said the group will work with ITU in getting the
HomePNA decisions ratified by the standards body. Historically, ITU chooses standards
two ways: they create it from scratch or endorse technology already created, he observed.
"I don't see ITU taking on approving and developing phoneline standards from ground zero,"
he said. The Review's Krechmer agreed.
Standards will help grow market
As is the case with other communications technologies such as 56 kbps modems, cable
modems, and digital subscriber line (DSL) modems, standards are the key to widespread
deployment, analysts say.
Krechmer said he expects work on the standard to progress rapidly, with a
preliminary, or "determined," standard possibly ready by April 2000. A formal
worldwide standard could be ready as soon as September 2000, he said.
A situation where an end-subscriber can buy products and have them communicate
easily with other products should help the U.S. market for home networking
products grow from $230 million in 1999 to $1.4 billion by 2003, predicts Cahners
In-Stat Group.
Adoption of a technology into an international standard doesn't automatically give
Broadcom or any other company an automatic lock on a market or ability to charge
monopoly prices. The ITU requires standardized technology to be licensed on a "fair
and reasonable basis." Also, the final standard often uses technologies from a
variety of different companies. |
