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

To: Black-Scholes who wrote (41242)	5/18/1999 12:40:00 PM
From: J Fieb	Read Replies (1) \| Respond to of 50808

More forbes... forbes.com n Greek myth, Icarus was the youth who flew too close to the sun, melting the wax on his wings and causing him to plunge to his death. For the past few years, people have been speculating that WebTV will go the way of Icarus. When the Mountain View, Calif.-based WebTV first appeared, the technical cognoscenti greeted its new technology with loud enthusiasm. They saw the future of the Internet in it. A device that combined television and PC functions like E-mail and Internet access seemed too good to be true. When it was bought by Microsoft Corp. (nasdaq: MSFT) for $425 million in the spring of 1997, expectations grew. With Microsoft's money and connections and WebTV's technology, how could it possibly lose? Well, for a while it did just that. Subscriptions languished and customers complained about its slow browser, poor visual quality and unreliable E-mail service. The potentially groundbreaking product was relegated to the status of being just another, not very good, set-top box. Microsoft's many rivals snickered and licked their chops, saying it was the beginning of the end. ------------------------------------------------------------------------ Set-top box companies are the new king-makers of the digital era. ------------------------------------------------------------------------ Fast-forward to May 1999. For the first time, set-top boxes are hot. Consider them the new king-makers of the digital era. For years, the set-top box was the ugly duckling of the consumer electronics world. Boring, utilitarian devices that were provided by the cable operators as part of the viewer's subscription package. But now the set-top box is getting a digital face-lift. No longer an obtrusive eyesore on top of your TV, these new supercharged units will have embedded high-speed modems that allow subscribers to surf the web, send and receive E-mail, play games, order videos on demand and even make telephone calls. No longer will people need separate VCRs, cable TV boxes, satellite decoder boxes or video game consoles like the Sony PlayStation. Instead, all of this ugly, unwieldy plastic will be replaced by one elegant, multifaceted box. According to market researcher International Data Corp. (IDC), sales of digital set-top boxes are expected to explode over the next five years and could reach 15 million units in the next four years. That works out to a top line growth rate exceeding 75% per annum. Currently there are over 2 million digital set-top boxes in use. No wonder everyone wants a piece of the action. General Instrument (nyse: GIC) and Scientific Atlanta (nyse: SFA) are the market leaders, but nipping at their heels are Sony (nyse: SNE), Royal Philips Electronics (nyse: PHG), Pioneer (nyse: PIO) and C-Cube Microsystems (nasdaq: CUBE). Even the Dulles, Va.-based America Online (nyse: AOL) has thrown its hat into the ring, building an interactive TV platform by using Cyrix's (nyse: NSM) hardware in partnership with Royal Philips Electronics NV, Network Computer and General Motors Corp.'s (nyse: GM)Hughes Electronics and DirecTV. This is where WebTV comes back into the picture. With all the activity in the digital set-top box business, what is Microsoft doing? Is it just sitting on the sidelines, watching as high-speed Internet access becomes the norm and allowing the aging WebTV platform to wither on the vine? Not likely. Redmond's revenge?