Low cost approach to digital TV..............
From Page One of Electronic News: March 9, 1998 Issue
Low-Cost Approach To Digital TV
By Peter Brown
Mountain, View, Calif.--As the autumn moves closer, the mighty conglomerates of Europe,
Japan and the U.S. are starting to push high definition television (HDTV) intensely--offering full
television sets at a cost of $8,000 and above. Quietly developing its own digital television offering,
however, is Mountain View, Calif.-based TeraLogic that claims to be the only privately held
semiconductor company targeting DTV devices.
Unlike the high prices asked by heavyweight systems and semiconductor companies, TeraLogic's
digital television (DTV) offering will enable systems vendors to provide DTV solutions priced at
$400 retail cost.
"Since the VCR was invented back in the 1970's there has not been a home run by any consumer
electronics manufacturer," said Peng Ang, chairman and CEO of TeraLogic. "These
manufacturers, as well as TeraLogic, are looking for the next big thing. With the flexibility of TV
and new types of products for integration into TVs, they believe digital television will be able to
re-stimulate corporate growth in their company. The next home run. There is competition from
every corner of this industry in the cable realm, the satellite market and certainly between the chip
and system vendors. However, at a $8,000 price point there is no way anyone is going to sell a
lot of sets." Mr. Ang and Jon Castor, who was part of a management consulting practice at the
time, founded TeraLogic in May of 1996. Mr. Ang spent 6-7 years as VP and GM of the
consumer products group at LSI Logic where he met Mr. Castor consulting on several projects.
Later, Mr. Ang left LSI and made the strategic decision to start TeraLogic with Mr. Castor.
Ahead of Conglomerates
TeraLogic plans to roll out its initial product sometime this quarter making available a DTV
offering ahead of some major semiconductor vendors. The initial DTV product will support all 18
ATSC standards--that was accepted by the FCC--as well as the upcoming DVB and Japanese
high definition TV standards. The DTV offering is claimed to be highly programmable, flexible,
and reduce the amount of memory needed in a DTV set, Mr. Ang said. TeraLogic has forged
alliances with software, CPU and other IC vendors to help support their DTV chips. The DTV
offering will enable cable television, satellite and terrestrial deployment companies to offer DTV
solutions for approximately $400 dollars at the retail level. "This is going to enable the consumer
electronics business to reach those million units sales people keep predicting," said Mr. Ang.
"Paying $8,000 for a television is ridiculous when you can enable the same picture in another
offering for $400. We will give them the architecture to build these cheap boxes and I imagine
they will be a plethora of different products all the way from the down converter boxes delivering
standard definition television up to the high definition standard boxes." In addition, TeraLogic
plans on looking into delivering high definition boxes to drive plasma displays in the home. Not
only will the company provide the DTV chips but it will also enable reference platforms, operating
system software from third parties, both proprietary and industry standard APIs, and graphical
user interfaces. The reference platform, dubbed the Teravision 2000, will allow hardware and
software development as well as the basis of product development. The company believes this is
a key element to its success. The platform could be used as a time-to-market tool to quickly
design a DTV set or HD or SD set-top converter box, Mr. Ang added. "We are designing our
own chips as well as selling and marketing them ourselves," said Mr. Ang. "We are following the
fabless semiconductor model where our primary revenue source will be through the sale of our
chips and supporting revenue from these reference platforms and software." Mr. Ang added the
company already has the support for Far East and U.S. foundries for its production of DTV
devices. TeraLogic has garnered funding from venture capitalists including Mayfield Partners, their
primary investor, as well as Vertex Management, TDF Management, UOB Ventures and
Levensohn Capital Management LLC. Currently, the company employs 50 people but is
expecting to increase that number to approximately 90 by the end of this year. To establish a
position in industry, TeraLogic is a member of the Advanced Television Systems Committee
(ATSC), the Consumer Electronics Manufacturers Association (CEMA), the Digital Video
Broadcasting organization (DVB) and the Digital Television Group (DTG). The company is also a
participant in both the MPEG-4 and JPEG-2000 standards committees
TeraLogic is thinking realistically in terms of its growth. Without the marketing resources, sales
force and manufacturing capability of these big conglomerates it will be hard at first to gain respect
and attention. But that doesn't worry Mr. Ang.
"This is going to be a huge market with an installed base of approximately 250 million analog sets,"
he said, "with all of those sets needing to be upgraded to receive digital signals. You don't have to
be the market share leader to get ahead. Second and third place is still a huge revenue generator
and a sizable market to sustain a company." |
