The article, not just a link:
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. |
