Older article, but interesting none the less
Copyright 1999 UMI Inc.;
Copyright American City Business Journals Inc. 1999;
Business Dateline;
Business Journal-San Jose
May 21, 1999
SECTION: Vol 17; No 4; pg B14
LENGTH: 1139 words
HEADLINE: NeoMagic Corp.: A sharper image
BYLINE: Susan Ditz
DATELINE: Santa Clara; CA; US; Pacific
BODY:
Headnote:
'System on a chip' hones quality of video and other graphics on computer screens
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Captioned as: STOCK TICKER*
NeoMac Corp. is making magic Silicon Valley style with a record sales increase of 93 percent in 1998, to $ 240.5 million. The Santa Clara company's success in multimedia accelerators for notebook computers is the result of pioneering the integration of three components-dynamic random-access memory, complex logic and analog circuits-into a single 128- or 256-bit chip. DRAM is the memory that runs the computer screen; combining it with these other components creates video quality as sharp as 30 frames per second.
NeoMagic has surpassed even its principals' expectations.
"When we did our initial business plan in 1993, we projected market penetration would be 25 percent by 1998," said CEO Prakash Agarwal. "We achieved 50 percent."
According to a survey by William O'Neil and Associates, NeoMagic experienced 503 percent revenue growth from 1996 to 1998, ranking it sixth among Silicon Valley's fastest-growing public companies. When NeoMagic started six years ago, graphics required up to five chips for logic and memory. This added to the size, weight and battery drain on portable computers. But proprietary technology called MagicWare (an abbreviation of "memory and logicware"), Mr. Agarwal explained, has enabled NeoMagic to take the semiconductor industry in new directions with system-ona-chip integration.
(Photograph Omitted)
Captioned as: CEO Prakash Agarwal is making magic Silicon Valley style.
The idea for the technology-which reduces component size and heat generation, thus increasing performance-was not new; but before NeoMagic's inception, one had been willing to take the risk of producing it because it might prove too expensive for commercial fabrication.
The six founders-Mr. Agarwal, Chet Bassetti, Clement Leung, Ravi Parameswaralyer, Deepraj Puar and Kamran Elahlanworked together at Cirrus Logic Inc. They decided to "mobilize multimedia" to give travelers high-performance computing power on notebooks anywhere, any time.
MagicWare provides more bandwidth and shorter access times from faster and wider on-chip memory bases. The technology delivers lower power usage, extending the battery life on portable computers.
The introduction of MagicMedia 256 AV last June heralded a new era for notebook PCs, offering them the same power, performance, functionality and Internet compatibility as desktop units. This new family of multimedia accelerators effectively raised the bar by putting integrated high-performance graphics, audio and video capabilities on a single chip. In view of how much the global work force relies on portable computers for business presentations, interactive training, industry research and even personal entertainment, NeoMagic's innovations represent a significant milestone.
The result: On a flight from San Jose to Boston, a person with a notebook computer containing NeoMagic's technology can create a multimedia presentation to be delivered upon arrival-and then watch the latest DVD movie before landing.
Widespread acceptance was evidenced when the company shipped 1 million 256bit chips within six months of the introduction. To date, that number has grown to more than 15 million.
"NeoMagic took a leap that caused a mini-revolution in notebook graphics," said Scott Hudson, a senior analyst at Cahners In-Stat Group. "They came in and changed the industry with superior technology."
In the fourth quarter of 1998, the company held 62 percent of the market and posted revenue of $ 112.9 million.
Mr. Hudson said NeoMagic is a success story because it has showed "a great degree of focus." The principals worked diligently with the PC manufacturing community to build trust, he said, and then they delivered.
Competitors include Canadian company ATI and valley companies Chips and Technologies (now part of Intel Corp.), Trident Microsystems Inc. and S3 Inc. Of those, "I think ATI will pose the biggest threat," said Mr. Hudson, because it holds a strong position in desktop graphics.
But Mr. Agarwal has no fear. "Our competition has tried and been unable to do what we have done," he said. "For the first time in the industry, all the top notebook manufacturers are all using the same NeoMagic chip and mass producing cost-effective products with this technology."
One of those manufacturers is Acer America, which produced 380,000 notebook units last quarter.
When Acer decided to get into the notebook arena, it already had established partnerships with Chips and Technologies and other graphics companies, according to vice president Arif Maskatia.
"When (NeoMagic was) getting started, I looked at their business plan and thought they would be a partner with the same business strategy and philosophy," said Mr. Maskatia. He said he also was impressed by how NeoMagic was able to provide the greatest integration with the lowest power. Now, he said, "NeoMagic is in 80 percent of all our product lines."
In February, NeoMagic announced its intention to begin focusing on some new consumer markets: digital cameras and digital video. Toward that end, the company made two acquisitions that month: the optical drive development group and associated digital videodisc intellectual properties from Mitel Semiconductor in England; and ACL of Tel Aviv, Israel.
Mr. Agarwal explained that DVD is emerging as the standard media platform, capable of handling all video, audio and computer data storage for home applications, enhanced with embedded DRAM technology.
The Mitel purchase added experienced professionals to NeoMagic's consumer products division; they will direct their energies toward developing technology in the DVD arena
Savvy Internet consumers have come to expect high-quality images, fueling demand for much more sophisticated equipment. That's where the ACL acquisition comes in.
"Combining ACLs innovative array-processing architecture with our embedded DRAM technology will enable us to offer exceptional image processing performance and low power for a great variety of small, highly portable digital multimedia devices and Internet appliances," Mr. Agarwal said.
The ACL engineering team already has developed an image processing technology used in aerospace and defense-related programs; NeoMagic will commercialize it for consumer applications. An example: Consumers could record a video of the kids on a trip or take still images with a digital camera, then send them directly to the grandparents via the Internet-all within minutes.
Mr. Agarwal predicts revenue from combined market opportunities could be as much as $ 5 billion by the end of 2002. That's a pretty impressive amount of magic.
Author Affiliation:
Susan Ditz is a freelance writer based in Pescadero.
GRAPHIC: Photo
LANGUAGE: ENGLISH
UMI-ACC-NO: 0045131
LOAD-DATE: June 21, 1999
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