Moving to tighten the reins on the quality, cost, and distribution of its imaging intellectual property, Peerless Systems Corp. is re-creating itself as a fabless ASIC company.
Semiconductor manufacturers that had served as the company's indirect sales channel will now become the foundries for its fabless business model as it adopts a direct-distribution strategy.
"A lot of our OEM customers complained that the price they were paying for these products was out of line," said Gary Panzer, head of the ASIC division at Peerless, El Segundo, Calif. "By the time you added in a Peerless royalty, the embedded-systems design fee, a fab royalty, and distributor margin, there was a lot of cost piled on. ... We often found ourselves in three- or four-way negotiations trying to make sure we got the right solution at the right price to the customer."
Furthermore, Peerless felt it was losing control over its IP. Under its previous distribution model, ASIC manufacturers could license its core technology, then reuse it in designs that didn't necessarily pair the IP with Peerless' imaging software. In these cases, the quality of the end product might be compromised, Panzer said.
"We're trying to simplify the process so that now Peerless can be the single point of contact," he said.
The primary challenge the company will face as a chip supplier is in delivering product on time and to OEM quality standards, although it's employing the same foundries as before. Only the distribution of the product has changed: In the United States, Peerless will now support OEMs directly, while Marubun Corp. will provide logistics and value-added support to customers in Japan, Panzer said.
Initially, Peerless will develop chips for the imaging market, and later expand its product line to address network peripherals, leveraging technology from Auco Inc., Redwood City, Calif., and HDE Inc., Seattle, which Peerless recently acquired. The company said it will build its IP library from internally developed functions and licensed standard interfaces.
The aim is to create products specific to a market but applicable across a wide range of customers, and which is customized by software.
Shipping now are the QuickPrint QP1910 and QP1940 graphics co-processors, which integrate Peerless' proprietary graphics-accelerator IP, Memory Reduction Technology, and embedded-imaging software for high-performance printers, copiers, faxes, and scanners. The chips are manufactured by NEC Electronics Inc. Pricing depends on volume and the customer's end solution, Panzer said.