--------------------------------------
***President
Clinton Remarks on E-Commerce
(November 30)
by Amanda Rogos
On November 30, President Clinton made some public remarks about e-commerce and its importance to our society's future. Here are the highlights of that speech.
*Last year only 10% of those with home PCs shopped for holiday gifts online, this year the figure is predicted to be over 40%.
*Information technology accounts for more than 1/3 of the United States' economic growth.
*If the sales being conducted over the Internet took place at one shopping mall, the mall would have to be 30 times the size of Minnesota's Mall of America.
*Five years from now, a facility 1,000 times the size of the Mall of America would be needed to handle the volume of sales predicted.
As a result of this growth, the President said he believed that this Internet era would not only transform commerce, but also, "lift America's economy in the 21st century."
Among other economic factors discussed the President stressed the importance of "the engine of tomorrow's economy: technology," and proposed a "first do no harm" policy. Under this policy, he urged the government to do nothing to undermine the capacity of emerging fields of technology but to work together to foster their growth.
The President and other leaders have been working on this type of policy for quite a while. This year 132 nations signed a declaration to refrain from imposing custom duties on e-commerce, Congress and other officials have passed a 3-year moratorium on new/discriminatory taxes on e-commerce, and a treaty to protect intellectual property online has been ratified.
In his speech the President sought the help of the FTC and other agencies, consumer advocates, industry and trading partners to develop approaches to extend consumer protection to ensure truthful advertising and full disclosure of information online. He also urged the FCC to promote greater competition to bring advanced high-speed connections into U.S. homes and small businesses. Through these efforts he believed, e-commerce would evolve in a beneficial way for the whole population but especially the segment that is forced to use slow inefficient connections today.
There are many battles forming today about how much the government should be involved in e-commerce growth. Many industries and individual countries believe in government regulation/taxation of e-commerce. President Clinton's leadership in self-regulation is an important step in the this battle for Internet growth and the success of its' businesses. The WAVE Report is following this market closely and will keep readers informed of the decisions involved.
***Gore
Commission Advises the White House on Digital Broadcasting
(December 18)
by Amanda Rogos
By Executive Order No. 13038, President Clinton established the President's Advisory Committee on Public Interest Obligations of Digital Television Broadcasting, informally known as the Gore Commission on March 11, 1997 to advice Vice President Gore on how digital broadcasters can use public airwaves to best serve the public's interest. The committee planned to report to the Vice President October 1, 1998 on what services broadcasters should provide to the public in return for their digital television licenses, for example, free air time to political candidates or children's programming.
The committee was formed in reference to the 1996 Telecommunications Act which authorizes the FCC to issue licenses for digital television services under the condition that the broadcaster remain subject to public interest obligations as deemed appropriate by the FCC.
Members for the commission were chosen from the private sector, including members of the commercial and noncommercial broadcasting industry, computer industries, producers, academic institutions, public interest organization, and the advertising community.
In October 1997, Edward Fritts, President and CEO of the National Association of Broadcasters (NAB) responded to the Gore Commission by stating, "Broadcasters welcome the opportunity to cooperate with the Gore Commission, but we will be vigilant in our resistance to government mandates that threaten the ability of local stations to determine how best to serve their communities."
On December 18th, Vice President Gore spoke on bringing television into the digital era. He said he believed that digital broadcasting presented unprecedented capabilities to entertain, educate, enlighten, and enrich. He encouraged the FCC to work with broadcasters to follow through with the recommendations of the Gore Commission and he urged Congress to move forward on the issues and to discontinue their efforts to regulate the FCC and threaten their initiatives.
The report was presented to the White House on the same day. According to the Center for Media Education, intense pressure and opposition from the broadcasting lobby has weakened the commission's conclusions and as a result they have decided only on vague, mostly voluntary proposals. Absent from the 10 core recommendations therefore are any proposals on the use of the expanded digital capacity for educational and civic programming services.
In response to a WAVE Report request the NAB would make no statement on the report. They are reviewing the report and the Board of Directors is scheduled to discuss it during the January meeting.
Media, public interest, and other non-profit groups are planning on asking the FCC to contribute to the debate to ensure that broadcasters contribute to the educational and information needs of their communities. The WAVE Report spoke to Professor Mark Crispin Miller of the Project on Media Ownership. He expressed the feeling that they "regard the report as grossly inadequate," although he said that they were not surprised with the results. He stated that the Gore Commission had narrowed their inquiry down to nearly nothing, deciding only to include free air time for public candidates. This left educational TV, commercial free children's TV and cultural programs out of the final report.
The FCC is expected to rule on broadcasting and digital TV next year.
Members of the commission are as follows:
Chairmen
*Leslie Moonves, President and CEO of CBS Television
*Norman Ornstein, Resident Scholar at the American Enterprise Institute
Members
*Charles Benton, Chairman and CEO of Public Media Inc.
*Frank Blythe, Executive Director of Native American Public Telecommunications
*Peggy Charren, Founder of Action for Children's Television
*Harold Crump, Vice President of Corporate Affairs for Hubbard Broadcasting Inc.
*Frank Cruz, Member of the Board of Directors of the Corporation for Public Broadcasting
*Robert Decherd, Chairman of the Board, President, and CEO of A.H. Belo Corporation
*Barry Diller, Chairman and CEO of HSN, Inc.
*William Duhamel, President of Duhamel Broadcasting Enterprises
*Rob Glaser, Founder and CEO of RealNetworks
*Jim Goodmon, President and CEO of Capitol Broadcasting Company, Inc.
*Paul La Camera, Vice President and General Manager of WCVB-TV Channel 5
*Richard Masur, President of the Screen Actors Guild
*Newton Minow, Counsel to the law firm of Sidley & Austin
*Jose Luis Ruiz, Executive Director of the National Latino Communications Center
*Shelby Scott, President of the American Federation of Television and Radio Artists
*Gigi Sohn, Executive Director of Media Access Project
*Karen Peltz Strauss, Legal Counsel for telecommunications policy for the National Association of the Deaf
*Cass Sunstein, Distinguished Professor of Jurisprudence at the University of Chicago
*Lois Jean White, President-elect for the National PTA
*James Yee, Executive Director of the Independent Television Servicehttp://www.nab.org
http://www.whitehouse.gov
http://www.fcc.gov
***LMDS - Duplex Digital Broadband Without Wires
The next evolution in computing will be based on two key market and technology factors: "Free MIPS" and pervasive connectivity. Market estimates show that this could result in 1b new computing devices and platforms being sold per year. Achieving such levels of penetration will require a wide range of new computing appliances, applications and supporting infrastructure. However, a major gap lies in the slow pace of accomplishing connectivity to the home and mobil platforms. An important market opportunity is provided by those infrastructure elements which can achieve rapid deployment, especially in broadband. Local Multipoint Distribution Service (LMDS) has the potential of fulfilling a niche in the broadband market to businesses and the home using wireless technology. Several news items on LDMS were reported in WAVE#939. In this article we examine the market and issues in more detail, in part based on a Bellcore study.
LMDS is a fixed wireless point to multipoint microwave technology. The frequency spectrum is at 28GHz and 31GHz and the FCC has allocated two blocks of bandwidth: A = 1,150MHz and B = 150MHz. What is unusual about LMDS is that the use of the spectrum is practically unconstrained. Another unique element is that, as a line-of-site technology, its multipoint capability is duplex and covers all directions from the microwave transmitting site - called the hub site. The receiving sites are called the customer transceivers (CTR). Further, the links are duplex and can be either symmetric or asymmetric. The broadband services, which can go as high as 1Gb/sec, offers a range of content and information delivery opportunities.
LMDS has had only limited deployment in that the FCC only auctioned spectrum in March. The government awarded 986 licenses on March 26, 1998 for $578,663,029. Another block of 168 licenses is due to go on the block on April 27, 1999. It should be noted that there were some estimates that the original auction could have netted up to $4b. There are a number of reasons for this and the uncertainty in the market was certainly one.
Originally the concept for LMDS was as a multichannel "wireless cable" service. However, as reported in WAVE#939 this has not proved economic. Much debate has ensued on the where the market lies. In February, 1998 Bellcore completed a study on the market: LMDS Services Profitability- An Economic Analysis. We summarize some of Bellcore's perspective and results below.
The recent events in Local Multipoint Distribution Service (LMDS) indicates that this technology is now seen as an alternative to fiber in the competition to deliver digital broadband data, Internet and telephony services to businesses and consumers. It enables rapid deployment of broadband access to the customer, independent of ownership of copper or cable plant. While technological issues have received much attention, the LMDS Business Case is complex, and Bellcore's research indicates that choice of system architecture, design strategy and mix of services offered will be critical to the success of any LMDS network. The Bellcore study assessed a variety of services and service combinations in
three (3) different Basic Trading Area densities,
with two system architectures,
under three (3) take-rate scenarios.
Economic scenarios take into consideration infrastructure costs, operating expenses, levels of consumer acceptance, and anticipated revenues per subscriber. The Bellcore model yields Net Present Value for various services bundles, and provides key insights to maximize profitability and return on invested capital. A conservative, rational framework is employed to provide a build-out schedule of how deployments could proceed. These are combined with in-depth knowledge of project costs and revenues to estimate the size and timing of the total LMDS market opportunity.
The result of this analysis is that even the most conservative estimates predict that the LMDS market, in the U.S., will exceed $1 billion in service revenues by year 2012 -- without video services factored in. The study results include:
---*While LMDS provides enough bandwidth to support video services, offering video by itself does not lead to a profitable deployment. Similarly, offering POTS by itself is not a profitable solution with LMDS.
---*Service combinations are likely to determine profitability of LMDS. While some services are not profitable if offered alone, they may be profitable if offered in combination with other services. For example, for medium "take rates" (the number of customers subscribing to a set of services), POTS is not a profitable service on its own but becomes profitable if combined with Internet Access.
---*For medium take rates and conservative estimates, the LMDS market in the U.S. is expected to exceed $1 billion in service revenues by year 2012. With video deployment, the $1 billion mark is reached sooner.
---*Positive cashflows are anticipated in less than five years when profitable LMDS service combinations are deployed. Net profit margins exceeding 30 percent could be realized in 6-7 years.
---*Service combinations featuring the highest Net Present Value are not necessarily the same as those offering the highest return on invested capital. The financial ends pursued by the LMDS investor will depend both on strategic intent and access to capital.
---*Because of the savings in infrastructure costs, LMDS can provide services more economically than other broadband access alternatives. The exact savings depend on many parameters such as service type, customer type, population density, take rates, etc.
---*In Bellcore's view, LMDS could be deployed to serve a medium size city as soon as nine months from the date at which the FCC auction terminates.
The study also confirmed or supported existing conclusions about LMDS including:
---*Interconnecting the backbone between LMDS hubs is more economical using a hybrid backbone than a fiber backbone. However, hybrid backbone systems face capacity limitations and may not be as cost-effective in the long run.
---*The likelihood for profitability is greater when LMDS is deployed in established sun-belt cities. Also, targeted "micro-service" areas in suburban regions can be profitable.
---*Both LMDS and wireline architectures can achieve 99.99% and 99.995% availability. LMDS can offer additional advantages including faster deployment and reduced infrastructure capital costs.
---*LMDS technology is scaleable. In other words, to increase the transmission area, additional transmitters/hubs can be efficiently located so that the cost adding new coverage is not drastically increased (i.e., to double coverage, the number of transmitters does not need to be doubled).
The WAVE Report spoke with Hady Salloum, Director of Broadband Access at Bellcore. His observations included the following:
---* The key economic issue in the profitability of LMDS is the income level per month for the services provided. As the study indicated just video or just telephony will not generate enough revenue.
---* It is very reasonable to provide high rate services to a site of up to 150Mb/sec. A key in any such flexible service offerings is spectrum management.
---* LMDS can be just as economical as fiber but there is a significant LMDS advantage due to its ability to accomplish rapid deployment.
---* LMDS can be both symmetrical and asymetrical. In the case of CellularVision, the reason for their highly asymmetrical service is that some of the bandwidth has been sold to WinStar.
---* The greatest near term appeal of LMDS is its ability to support large to small businesses.
---* Streaming audio and video are attractive potential content streams.
---* It is doubtful that a single air standard would be applicable to LMDS. The reason being the need for tailored solutions based on location, obscurations and distance to be covered between the hub and customer sites.
---* It is not a negative that the FCC auctions were substantially less than the $4b forecast. The bidders will have more funds to apply to their infrastructure investment.
---* LMDS is not applicable to mobil solutions because of the line of sight restrictions. However, this does not preclude using LMDS as a distribution technology and then downcoverting the RF to a frequency that is not line of site and that which could be received on portable devices.
---* LMDS is not just a US market. Bellcore has seen a recent rise in interest in foreign markets.
LMDS Services Profitability- An Economic Analysis (# LP-367) $4,995
Bellcore
8 Corporate Place, Room 3A-184
Piscataway, NJ 08854-4156
800-521-CORE
732-699-5800
http://www.bellcore.com/marketplace.html
At 4th Wave we believe that enabling a broad high volume computing appliance market is related to the user options, pricing and universality of platform connectivity. LMDS is just one more technology which provides a means to deliver broadband, potentially rapidly and with lower infrastructure costs. It is a technology to watch, along with its implementations which go well beyond the traditional cable and telephone markets.
***IBM Chips
Help Digital Cameras See the Light
(December 7)
IBM introduced image sensor chips for use in consumer and professional digital still cameras. These charge coupled devices (CCDs), use advanced process and color filter technologies to deliver the high sensitivity required for quality digital still pictures.
IBM intends to incorporate the 1.3 and 2.0 Mpixel Array CCD image sensors into two production-ready camera designs developed by leading camera and lens design companies. These complete solutions include integrated chip designs, lenses, CCDs, operating system, analog to digital image converters and ASICs to process images and perform camera functions.
These CCD chips are produced in IBM Microelectronics' advanced 8-inch fabrication facilities using 0.5-0.35 micron process technology, multiple polysilicon and metal levels, and a fully-planarized back-end-of-line metalization process.
These image sensor products offer the following advantages for capturing quality digital photographs:
-- Full frame design enables greater than 95% usable pixel area vs. 50% (typical) for interline technology (adapted from past camcorder applications); also eliminates the need for microlens (used by interline devices) which is subject to light scatter problems and adds additional complexity and cost to lens design.
-- Vertical anti-blooming design to effectively control localized overexposure with no loss in active pixel area.
-- State-of-the-art process techniques for extremely low dark currents (less than 100 PA/cm(2)).
-- Dyed resist pastel color filter that significantly improves light transmission.
-- Chemical Mechanical Polish (CMP) planarization technique yields very flat surfaces for color filter application, thus greatly reducing light scatter.
***Lucent
Technologies' chip enables wireless communications in 3Com's Palm VII
(December 2)
Lucent Technologies Microelectronics Group supplied the digital signal processor (DSP) which provides the wireless communications capabilities for 3Com's new Palm VII connected organizer.
Lucent's POMP-15 ("Peace of Mind Processor") chip, introduced in 1996, enables the Palm VII organizer to communicate with the Mobitex-based BellSouth Intelligent Wireless Network, and can perform other wireless systems as well.
Lucent's POMP-15 chip executes the functions typically requiring three chips, thereby lowering the DSP and codec circuit board space consumption. This chip performs DSP functions such as channel coding, as well as digital-to-analog and analog-to-digital signal conversions. The low-power-consuming POMP-15, which operates on 40 microamps at 3 volts in full sleep mode, enables weeks of battery life on the Palm VII organizer.
3Com reduced its product development time and costs using Lucent's highly-integrated development tools and its FlashDSP technology, which is offered along with the POMP-15.
***3Com
announces Program to Bring Internet Content to the Palm VII Organizer
(December 2)
3Com introduced a program designed to enable web developers and Internet content providers to provide Internet-based information wirelessly to users of the upcoming Palm VII connected organizer . Through this program, 3Com will offer a free and comprehensive set of tools, technical resources and services for quickly and conveniently making information residing on existing web sites accessible to users of the Palm VII organizer. This program is the next step in 3Com's strategy to rapidly bring a broad range of wireless information access and e-commerce solutions to the industry-leading Palm Computing platform.
The development tools provide a simple and intuitive interface for building Palm query applications that can be downloaded from the desktop to the Palm VII organizer. Query applications are easy-to-use forms that Palm VII device owners use to quickly request a specific set of desired information such as flight schedules and fares or the latest sports or stock market headlines from a specific site on the Internet. The tools used to build query applications are based on standard HTML, so developers can build and deploy them with little to no learning curve involved.
The development tools and resources for free download at the time of the field trial in early 1999 will be available at http://www.palm.net/devzone. These include a style guide, quick start guide, FAQ, code samples, utilities, a Palm OS software emulator for testing newly built query applications and full documentation. The Palm.Net site will feature an area that allows developers to submit query applications for inclusion in a central database and identification to the Palm Developer Marketing team.
Upon submission to the Palm.Net site, a query application will be reviewed and tested for quality assurance by Palm Computing. If approved the query application will be placed in the public area within the Palm.Net sight and made available to customers both for keyword search and download. Keywords search capabilities including "hotlist" (most frequently downloaded) and "what's new" (recently uploaded) will assist Palm VII organizer users in finding interesting and useful query applications.
More than 20 of the world's leading Internet content providers have already built query applications that ship with the Palm VII organizer, including ABCNEWS.com, Bank of America, ESPN.com, Etak, E*TRADE, Fodor's, Frommer's, MapQuest, MasterCard, Merriam-Webster, Moviefone, OAG, TheStreet.com, Ticketmaster, Travelocity, UPS, USA Today, U.S. West, Visa International, The Wall Street Journal Interactive Edition, The Weather Channel and Yahoo!.
***ATI'S
All-in-Wonder Pro selected by Gateway
(December 7)
ATI Technologies announced that Gateway has selected ATI's All-in-Wonder Pro and also its hardware DVD solution for the Destination XTV Digital Media Computer.
***E&S
AccelGALAXY Graphics Selected for Hewlett-Packard Kayak PC Workstations
(December 7)
Evans & Sutherland announced that Hewlett-Packard has selected E&S's graphics technology for HP professional workstations.
HP will offer the E&S REALimage-based AccelGALAXY graphics subsystem on Kayak XA, XA-s, and XU workstation models.
According to an announcement made by Hewlett-Packard, the company is expanding its Kayak PC Workstation product family to include pervasive and affordable graphics capability across the breadth of the line.
The E&S AccelGALAXY graphics subsystem is based on the REALimage 2100.
***Dell, 3Com
to Enable High-Speed Internet PCs With ADSL, Cable Internet Services
(December 3)
Dell Computer and 3Com Corporation announced that the two companies will deliver high-speed, integrated modems that will match Internet service deployments from SBC Communications Inc. (ADSL service) and AtHome Networks (cable service).
The new high-speed Internet modems are expected to be available early next year on Dell Dimension PCs, marking the latest development in Dell's ConnectDirect initiative to customize PCs for high-speed Internet services from leading U.S. telephone and cable companies.
***Wind River
Systems provides digital imaging solution to Minolta
(December 7)
Wind River Systems announced that Minolta Corporation will use Wind River software in a number of next generation digital imaging products. Minolta will use the Tornado development environment and the VxWorks embedded operating system to build a variety of personal and business laser printers, enterprise-wide digital copiers, and consumer digital still cameras.
Wind River sees digital imaging market as a key business area .
Available for UNIX, Windows 95, and Windows NT host platforms, more than twenty target processor architecture families and hundreds of variants and derivatives, Tornado is the only complete software cross-development environment for embedded systems. Tornado is integrated and includes powerful development tools and VxWorks, a scalable real-time operating system.
Open and customizable, Tornado also facilitates the use of third-party and customer-developed tools to enhance its capabilities and meet unique customer requirements. Tornado has more than 270 software and hardware partners and is used by thousands of developers worldwide.
***Microsoft
Project Surpasses 3 Millionth-Customer Mark
(December 7)
Microsoft announced that over 3 million customers worldwide have purchased Microsoft Project.
***MP3.com
Breaks Out Top Tier Artists
(December 3)
While the debate continues around the controversial MP3 audio format, MP3.com announces the addition of high caliber artists to it's 6,000 song archive of freely available songs. The latest additions ring in a new era where MP3 and Internet marketing are no longer limited to the garage bands, but now being used by some of the most recognized names in music. People like to hear music before they buy it and MP3.com provides an avenue for big and small artists to reach out to fans.
"The legal tug of war continues between Diamond Multimedia and the RIAA over the Rio portable player and the MP3 format. But every day we're adding some of the finest musical content available through partnerships with quality record labels," remarks Michael Robertson, CEO of MP3.com. "Partnerships with top labels like Platinum Entertainment are not only a stamp of approval for our aggressive Internet focused music marketing strategy, but a validation for the entire MP3 format and community."
***Diamond
Multimedia's Monster Sound MX300 Audio Accelerator Ships
(December 2)
Diamond Multimedia announced that the company is shipping its Monster Sound MX300 audio accelerator .
Diamond's Monster Sound MX300, featuring Aureal Semiconductor's Vortex 2 processor and A3D 2.0 positional 3D audio support, including Dolby Digital support and interactive positional 3D audio rendering technology.
Diamond's Monster Sound MX300 is available for a U.S. estimated retail price (ERP) of $99.95 .
***Samsung
Selects 8X8 LVP Chip for Web Videophone
(December 3)
8x8 announced that Samsung is using 8x8's Low Bitrate Video Processor (LVP) chip in its WebPhone.
The WebPhone includes an H.324 videophone for standard telephone lines, an H.323 videophone for the World Wide Web, a Web browser, an email client and an innovative personal information manager. The WebPhone will be available at consumer electronics retailers early in 1999. 8x8's LVP is a high-performance video and audio processing chip that supports both the H.324 and H.323 videophone standards.
The LVP is suitable for all low bitrate videoconferencing applications, particularly via standard telephone lines (POTS) and computer networks (LAN/Internet). The LVP supports the ITU standards for video communication over those media: H.324 for POTS and H.323 for Internet.
The LVP can deliver up to 15 frames per second over POTS telephone lines. In POTS applications, a single LVP implements video and audio compression, full-duplex echo cancellation, communication protocols and the graphical user interface, making it the only single-chip H.324 videophone solution available today.
***Scientific-Atlanta
and Microsoft to offer WebTV Service
(December 2)
Scientific-Atlanta and Microsoft announced the two companies have signed a letter of intent to provide cable system operators and their subscribers with the Microsoft WebTV Network service for customization and use on the Scientific-Atlanta Explorer 2000 advanced digital set-top box and digital interactive network.
Under the agreement, Scientific-Atlanta will provide support to WebTV Networks to integrate the WebTV service with Scientific-Atlanta's conditional access, head-end network systems and other technologies. This will enable cable operators to offer the service seamlessly integrated with cable video programming through standard set-top boxes.
In addition, cable operators will be able to cobrand the service and add specific content according to each MSO's needs, for a unique, customized offering. The WebTV service allows users to customize television viewing with features ranging from searchable TV listings to e-mail and Web browsing on the television. The Explorer 2000 set-top box allows consumers to interact with a broad range of new and existing services over their cable system. The Explorer 2000 set-top is capable of delivering TV-based applications such as Internet access, video on demand, electronic commerce and in-home networking.
The two companies also announced they will collaborate on the design of a next-generation set-top box that will run the Windows CE operating system and be based on the Microsoft WebTV television software platform.
Microsoft and Scientific-Atlanta will jointly define the features and services to be supported on the next-generation set-top boxes. The system will be based on the Microsoft WebTV television software platform, which includes Windows CE, the Microsoft Commercial Internet System and WebTV technologies. The combined Scientific-Atlanta and Microsoft technologies will enable the delivery of existing cable system operator services -- made possible via Scientific-Atlanta technologies -- and the existing WebTV service in addition to any features supported by the Microsoft WebTV television software platform, including Web browsing, video on demand, e-mail, games and electronic programming guides.
This and future set-top designs based on the Microsoft WebTV television platform will be OpenCable-compliant, which will allow them to be interoperable. OpenCable is an initiative of the cable television industry being managed through Cable Television Laboratories Inc. (CableLabs) with a goal of attaining interoperable digital set-top boxes manufactured by multiple vendors.
WebTV Networks, Inc., operates the WebTV Network service and designs WebTV-based Internet terminals and receivers available from companies like Sony, Philips and Mitsubishi at consumer electronics stores nationwide. Costs start at $99 for the Internet terminals and $199 for the Internet receivers, and $19.95 or $24.95 per month respectively for the WebTV Network service. The WebTV Network service is available in the United States, Canada and Japan and has over 500,000 subscribers. WebTV Networks, Inc., based in Mountain View, Calif., is a subsidiary of Microsoft Corp.
***Nokia -
head of digital pack in the U.S. Handset market
(December 3)
Sales of digital handsets have eclipsed those of their analog counterparts for the first time in the U.S. market, Dataquest Inc. announced. The technology research firm, a Gartner Group Inc. [IT] subsidiary, based its conclusion on an analysis of domestic handset sales through the first three quarters of 1998.
The trend toward digital's superiority over analog in the U.S. handset market has been six years in coming but nonetheless constitutes a "major transition," San Jose, Calif.-based Dataquest said. The U.S. digital handset market is on a pace to experience 170 percent growth this year, based on nine-month sales of 10.1 million units versus 7.9 million analog units.
According to Dataquest's figures, Nokia is the runaway star in the U.S. market this year, garnering a 40.3 percent share of digital handset sales through the first nine months versus a 19.8 percent share for all of 1997. Much-maligned Motorola Inc. [MOT] is staging an impressive comeback, racking up an 11.5 percent digital share for the nine months versus 6.3 percent for all of last year.
Conversely, Ericsson Inc. and Qualcomm Inc. have seen their market shares contract. Ericsson's digital share of U.S. handset sales went from 41.3 percent last year to 20.6 percent for this year's nine months. And Qualcomm lost more than half its share - - from 17.4 percent for 1997 to 8.2 percent for the 1998 nine months.
Nokia's 6100 series helped propel the company into the top spot, reflecting in part sales generated through AT&T Wireless Services Inc. and its One-Rate plan, according to Dataquest analyst Matt Hoffman. Motorola's rebound stems from rising acceptance of its GSM- 1900 portfolio and from inroads made in the TDMA and CDMA segments, he said.
Japanese and South Korean manufacturers are prominent among the other vendors of digital handsets in the U.S. market. TDMA handset sales, Dataquest said, have been growing faster than CDMA and GSM-1900 sales, as measured in terms of both raw units sold and percentage increases. The company's latest study on the U.S. digital handset market will become available in mid-December.
***Tut
Systems filed for initial public offering
(December 1)
The Venture Capital Journal reported that Tut Systems filed for an initial public offering July 31.
The company will offer 2.5 million shares at $14 to $16 each. The IPO, underwritten by Lehman Brothers, Dain Rauscher Wessels and Salomon Smith Barney, will leave 10.8 million shares outstanding.
There are no selling shareholders. Venture investors in the company are Apex Investment Fund II, L.P., Apex Investment Fund III, L.P., Spectrum Equity Investors, L.P., Vanguard IV, L.P., AT&T Venture Fund I, L.P., AT&T Venture Fund II, L.P., Investment Advisors Inc. Investment Funds IV Inc., IAI Investment Funds VI Inc., IAI Investment Funds VII Inc., IAI Investment Funds VIII Inc., The Productivity Fund II, L.P., Environmental Private Equity Fund and Rosetree Partners General Partnership.
Tut Systems designs, develops and markets products that make high- speed data access possible by using the copper infrastructure of telephone companies, as well as the copper telephone wires in homes and businesses. The company relies on contractors to make its products and sells them directly or through original equipment manufacturers and resellers. Customers include AT&T Corp., Chevron Corp. and Lockheed Martin Corp.
Proceeds from the IPO, estimated at $33.9 million, will be used for general business purposes, such as working capital and capital expenditures, enhancing research and development and attracting key personnel. About $2.5 million of the IPO proceeds will be specifically used to purchase the full intellectual property rights for one of the company's main technologies. Since the rights for this technology are currently partly owned by its co-inventor who is no longer with the company, Tut Systems must pay royalties.
The company, which was incorporated in California in 1983 and began operations in 1991, suffered $3.4 million in losses in 1995, $4.4 million in 1996 and $9.2 million in 1997.
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