TECH TALK By Paul Motter (MF Networx) (Feb 10, 1997) -- The contenders in the 56K modem derby are in the starting gate. Let the handicapping begin! Background: There are currently 4 major players in the line-up who will be providing competing technology through their chipsets: US Robotics, Rockwell Semiconductor, Lucent Technologies, and Motorola. Each of them has formed alliances with various hardware vendors. There is currently no standard set therefore non-interoperability is a factor. However, market demand is also a factor, and until a standard is set the positioning in the marketplace will be followed closely. If you examine the customer side of the issue, US Robotics has an edge because of its high profile among consumers. Many loyal customers are dedicated to their product even though it tends to cost more than competing products. USRX also has a time to market advantage in that they have already sold many modems that will be software upgradable to 56k when it becomes available, most likely within the next two weeks. But what originally appeared to be a significant advantage for US Robotics, being first to market by many months, has dwindled lately as the release of their product has been delayed from the original January target. Furthermore, competitors Rockwell, Lucent, and Motorola have all stepped up their target release dates. While all the major players have announced that product is eminently ready, no one seems to actually have any 56k modem service currently available to the general public. This is critical since 56k demands a digital connection at the end connected directly to the Internet or on-line host. This presents a duality that may put a damper on the situation; which comes first, the customer or the ISP? According to the Dell'Oro group, a technology research firm in Silicon Valley, USRX only commands a 12% market share of the installed modem site (ISP and on-line hosts) modem ports. Rockwell chipsets, the competing implementation, currently have a 70% share of such central site modem pools (according to Dell'Oro) because of their alliance with Microcom, the modem supplier to several major networking companies. Lucent and Motorola command the remaining 18% of the installed modem pool at central sites. Rockwell has pre-announced availability of a hardware chipset this month and this chip will not be software upgradable until sometime around mid-year. However, the central site modem pools that USRX is currently servicing belong to the highest profile ISPs available, AT&T's Worldnet and AOL for example. In addition, the excitement of X2 has spurred more ISPs to sign up daily. Rockwell's market tends to belong to the smaller ISPs and remote access equipment manufacturers. The larger companies are the ones expanding the fastest while smaller ISPs will likely need to consolidate or die away before too long. However, what are the chances that a large On-line service will limit itself to only one standard, either USRX or Rockwell? Slim, in my opinion. Common sense tells us they would potentially be limiting themselves to half of the available marketshare by doing so. The darkhorse who could emerge as the surprise in this story is Lucent Technologies. Recent indications are that they have a 56k modem that has the ability to send data upstream at 45 kbps (compared to a maximum of 33.6 for the Rockwell and USRX implementations). This would enable video-conferencing, over the Internet even of a greater quality than the other two makers. Hints are that they could eventually manage an even greater upstream data-rate. Add to this their obvious knowledge and installed base of central site (telco) equipment and you have a powerful combination. Like USRX, their modems will be software upgradable. Lucent has pre-announced availability of their modem in March. Lucent Technologies has agreed to make their DSP software upgradable chipsets interoperable with Rockwell. (Thanks to Barry Phillips of OEM Magazine for background for this article. His article may be reached at: http://www.techweb.com/se/directlink.cgi?OEM19970201S0017). Ethernet Hub and NIC makers duke it out: MRV Communications came out with higher than expected earnings this recent quarter. Having announced a gigabit-ethernet product, a new IP switch, and a recent alliance with Intel, their story looks interesting. Unfortunately, solid information about this company is sometimes hard to sort out. Their products are somewhat cheaper than the competition's, and their claims about what they can do often appear to be something of a stretch, probably due to a somewhat mismanaged marketing focus. However, on the surface this company seems to be making headway in a field where some of the big guns are faltering. What is wrong with 3-Com for example? Simple, competition. Intel has drastically cut prices on its 10/100 ethernet cards. Competing switch-makers are sprouting up like weeds. Asante, N-Base (MRVC), Intel, and Bay are all competing for the same customers. Add to the mix the proliferance of cheaper than cheap ethernet network card makers like Kingston, Adtran and Linksys and you see networking becoming a cut-throat business. The fact is that ethernet has become a mature technology and that usually leads to slimmer margins.

© Copyright 1995-2000, The Motley Fool. All rights reserved. This material is for personal use only. Republication and redissemination, including posting to news groups, is expressly prohibited without the prior written consent of The Motley Fool. The Motley Fool is a registered trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us