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Technology Stocks : S3 (A LONGER TERM PERSPECTIVE) -- Ignore unavailable to you. Want to Upgrade?

To: Calvin Scott who wrote (14530)	9/20/2000 11:06:47 AM
From: John Nasser	Read Replies (1) \| Respond to of 14577

S3 To Spin Off Info-Appliance Biz By Arik Hesseldahl Say what you will about S3; the company sure knows how to change quickly. Once focused on riding the back of the PC market to greatness, S3 (Nasdaq: SIII - news) has lately focused all its attention beyond the PC. Starting out as a PC chipset vendor, it moved into selling PC graphics chips for gamers. Last year it acquired Diamond Multimedia and got into the business of selling the Rio MP3 digital music player. That led S3 to nearly triple its revenue to approximately $300 million for the first six months of the year compared to the same period last year. But this year it also spun off its graphics chip business into a joint venture with Taiwan's VIA Technologies, effectively leaving its PC-related business interests behind. Its new focus was to be on information appliances. But that's about to change again. Today S3 will announce the formation of a new wholly owned subsidiary called Frontpath, which will take over S3's information-appliance operations. Based in S3's headquarters in Santa Clara, Calif., the new firm will assume the appearance of a startup, with all the marketing and manufacturing power of S3 behind it, says general manager Janet Leising. S3, meanwhile, will continue to develop its Rio music player business and its home networking product line. Frontpath is only the latest of many companies hoping to cash in on what is expected to be the next big thing in consumer electronics: the wireless information appliance. Frontpath is one of many companies that think consumers will one day want a gadget the size of a legal pad that's part PalmPilot, part PC and functions as a walk-around, Web-ready device connected to the Internet via a wireless network. But Frontpath's not alone. National Semiconductor (NYSE: NSM - news) has been promoting its WebPad concept for years and has just begun shipping a chip it calls Geode that will make it possible. Several manufacturers, among them Viewsonic, Taiwan's Quanta Computer, Proview and Turkey's Vestel, all privately held, have signed on to develop WebPads based on National's design. Seattle-based ePods has also tried to develop the market with limited success. Frontpath will develop products based on Transmeta's Crusoe chip. While Transmeta's chips have won several converts in the notebook PC space, its chip offering for WebPad-like devices has comparatively few takers, indicating lukewarm interest from the industry. But a profitable business model has yet to materialize, says Bryan Ma, an analyst with International Data Corp. in Mountain View, Calif. He says he's unconvinced that consumers will ever pay any serious money for wireless WebPads. Manufacturers are likely to turn to some kind of subsidy model, selling the devices through a service provider like America Online (NYSE: AOL - news) or Microsoft's (Nasdaq: MSFT - news) MSN rather than through retail stores. ``In all honesty, it's not clear to me where companies are going to make money selling these things,'' he says. IDC's forecasts don't call for sales of the devices to break the million unit mark before 2004. Frontpath seems to have realized this and will attack non-consumer markets first. Leising envisions selling Frontpath devices to educational institutions and health-care facilities first, beginning in the first quarter of 2001. Consumer devices will follow later, she says. That makes sense to Kevin Burden, another IDC analyst, who says that Frontpath and any other companies eyeing the consumer WebPad marketplace will have to wait for broadband home access, either by cable modem or digital subscriber line (DSL) connections, to saturate the market first. In the meantime, they'll have to support themselves by developing the devices for so-called vertical applications, meaning business uses that are catered to specific industries where broadband access through corporate networks is more common. But Burden says the opportunities for uses of the device in health care, for example, could be enormous. ``Doctors will want a device that does more than handle calendars and contact information,'' he says. ``There is a lot of untapped potential here.'' But even in those areas, Frontpath will run into plenty of competition from already entrenched companies like Symbol Technologies (NYSE: SBL - news), which makes a huge line of industry-specific electronic devices for industries like health care, agriculture, retail sales and manufacturing. How those industries will respond to newcomers is uncertain. Or maybe S3's latest costume change will earn rave reviews. Go to www.forbes.com to see all of our latest stories.

To: Calvin Scott who wrote (14530)	9/20/2000 2:00:53 PM
From: Mighty Mizzou	Read Replies (1) \| Respond to of 14577

no one likes to admit it but the silent majority supports it. ROFLMAO! Good one! I dont think interest is waning on S3, I think the interest is sidelined due to transition. S3 is going from a fuzzy caterpillar to a beautiful Monarch butterfly. BTW, I have a nice chunk of CRUS. Right on! But I think you're being too critical of KP, in which you are the majority. Yes, the waiting sucks but we are starting to see execution. Frontpath is a nice shot in the arm. Just hope it doesnt turn into a pain in the butt. <g>