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Technology Stocks : C-Cube -- Ignore unavailable to you. Want to Upgrade?

To: BillyG who wrote (27697)	1/7/1998 4:26:00 PM
From: John Rieman	Read Replies (1) \| Respond to of 50808

DTV and settops, Phillips squares off against Intel........................... ijumpstart.com Philips' TriMedia Lays Claim to DTV With OEM Deals; Offers Hardware Vendors Lower Prices and More Flexibility than Intel <Picture><Picture><Picture> PC component suppliers looking for Digital TV deals need to seek out customers now because at least one semiconductor company has already secured two design wins. Philips Semiconductors' [PHG] is gaining momentum with its TriMedia processor, and this week the chip supplier is expected to announce a deal with a Samsung Corp. U.S.-based subsidiary. Philips Consumer Electronics Inc. also has commited to use TriMedia in DTV products. (see MMW, Nov. 26, 1997) Samsung will incorporate TriMedia chips into set-top boxes in the fourth quarter, and San Jose, Calif.-based Samsung Information Systems America (SISA) is developing a software module that will enable the chip to convert programming broadcast in ATSC high-definition for playback on traditional NTSC TVs. This down-conversion process is similar to the approach Intel Corp. [INTC] is taking to market the Pentium II as a DTV option. (see MMW, Dec. 10, 1997). The economic advantage Philips has over Intel, at least in the short term, is significant. Jack Chaney, manager of Samsung's Digital Media Lab, said the set-top implementation will require two TriMedia chips, which today sell for about $50 each in OEM quantities, offering OEMs a far more compelling sales proposition than adding a 300 MHz Pentium II. That Intel processor costs more than $700 now, and likely will sell for $200 to $500 in the fourth quarter, depending on pricing trends. Industry watchers agree Intel will have a hard time convincing OEMs to use the P II for the first wave of low-cost, down-converter boxes. "The economics for Intel don't pan out," said Michael Bernstein, an analyst with market research firm Semico. "The set-top boxes are going to have to be $200 or $300, otherwise the market isn't there." Will Strauss, an analyst with industry watcher Forward Concepts, said the Pentium II as the main processor for Digital TV products is a "pipe dream on Intel's part that makes no sense." "If the only tool you have is a hammer, every problem looks like a nail," he said. Neil Mitchell, Philips marketing manager for Digital TV and TriMedia, offered a similar observation. "The Intel architecture carries a lot of baggage with it in terms of costs," he said. "I'm sure they have similar things in the works, but the question is in what time frame and at what cost." Intel's DTV Agenda Intel initially is likely to target vendors building high-end set-top boxes designed to display more than digital video. Tom Galvin, Intel's director, market development for digital broadcast and broadband, envisions the P II implementation into Digital TV hardware as a way to enable users to receive rich electronic publishing information and participate in electronic commerce. Moreover, Galvin expects Intel's pricing to be in line with a sub-$500 set-top once the market takes off in mid-1999. "Our ability to get that into a sub-$500 box will be very realistic and doable," Galvin said. "My guess is, you'll see an Intel architecture-based set-top box sometime in '98." The company also is very interested in getting a design win with the Windows CE operating system. It's debatable if Intel -- a company that prides itself on better than 30 percent margins -- can come out with a Pentium "light" chip to down-convert DTV without throwing its entire business model out of whack. Like Intel, Philips wants its chips to be a part of the DTV road map over the long haul. To that end, the company has developed a reference design that offers higher-grade capabilities with external hardware used for MPEG-2 decoding that can be built into a variety of DTV products. Philips' goal is to make money by selling chips rather than reference platforms, so the chip supplier will offer the design free of charge to an inner circle of customers. (Forward Concepts, 602/968-3759; Philips Semiconductors, 408/991-2332; Samsung Media Lab, 408/544-5470; Semico, 602/997-0337.)