Settops, everybody wants in............................................
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Teri Sprackland, Santa Clara
US$1B Set-Top Box Market Sparks Keen Competition
In Silicon Valley, as companies are scouting for the next "killer app" that will make millions of dollars when customers beat down their doors, the set-top box could be the next "killer appliance," rather than application, in the emerging multimedia crossover market between computers and consumer electronics.
As many scenarios as participants exist for this multimedia market's development. Despite that uncertainty, some form of set-top box is a key component. By the year 2001, the product revenue from set-top boxes will top US$1 billion, according to projections by Paul Kagan Associates Inc, Carmel, California.
Hybridization of computers and consumer electronics is needed to make the technology more accessible and affordable. Pioneering the market has been WebTV Networks, Inc recently acquired by Microsoft Corp, both of the US. Mitsubishi Corp, Sony Corp, both of Japan and Philips Electronics NV of the Netherlands all have announced web browsing set-top boxes in partnership with WebTV.
WebTV does have strong competition. Sun Microsystems Inc of the US recently acquired Diba Inc, and intends to license Diba's software to companies interested in making their own version of the set-top boxes.
Two of Diba's licensees, Teco Information Systems Co, Ltd and Sampo Corp, are Taiwanese companies that will manufacture branded set-top boxes for their local markets and sell the generic box to original equipment manufacturers (OEM) in other markets, according to marketing director Ellen MacDermid at Diba, now renamed the Consumer Technologies Group at Sun.
"We're licensing all the software and hardware reference design and documentation that a manufacturer needs to build Internet set-top boxes. They plug into standard televisions and work with any international television standard," she says.
Additionally, cable companies or Internet service providers are a strong potential market, because they can lease or give boxes to customers, making their profit from monthly fees, on the cellular telephone industry model.
Another competitor, Advanced RISC Machines (ARM) Ltd of the UK, a company created by Acorn Computers Ltd of the UK, and VLSI Technology Inc and Apple Computer Inc, both of the US, is licensing its low power, low cost microprocessor to set-top box designers. Set-top boxes could be the jackpot winner for ARM, which gets royalties from licensees rather than revenues from hardware production. Cirrus Logic and Atmel Corp, both of the US, are among ARM's semiconductor partners.
"It is a historic transition time as analog and digital technologies merge. In that technology, so far LSI Logic Corp (of the US) has been the real success story locally in this market," Jonathan Cassell, an industry analyst at Dataquest, says. VLSI Technology is making transport chips to separate data streams coming into the set-top box, and demodulation chips. SGS-Thomson Microelectronics NV of France, Philips, and Motorola Inc of the US are also on his as-yet unpublished list of latest winners. Motorola is expected to build on its position as worldwide leader of chip supplies, its 68000 microprocessors, to the analog cable TV boxes.
Driving chip demand is the need for more powerful processors with 32- or 64-bit RISC engines to run Windows CE. More memory is needed for compression to the MPEG-2 standards. Two way cable or telephone modems are need to support "back channel" - the ability of the consumer to respond to, not simply receive, content.
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Cost Still Too High
Cost is central to consumer electronics marketing. Analysts say the unit must cost about US$300 to be attractive. To bring costs down and remain profitable will be an integration challenge. Dataquest estimates that component costs alone now top US$400.
"To make a set-top box at an acceptable price, the system electronics will need to be shrunk to one, or at most two, super VLSI chips," notes Noel Hurley, consumer/multimedia business development manager at ARM.
Smaller, cheaper chips are important, but so is virtual chip design, where software and hardware merge. Standardization issues in virtual chip design are significant enough to have brought together 150 electronic design automation (EDA), system, intellectual property, and chip vendors in the Virtual Socket Interface Alliance. That group's president, Doug Fairbairn, expects several major standards to be approved by members in late January 1998, pushing forward more product development. |
