When Acer Inc. was scouting out channels for a Web box it was building, the Taiwan computer maker turned to National Semiconductor Corp. for help. National, which had supplied a reference design based on its Geode embedded processor, acquainted Acer with Internet Appliance Network, a Web-brand marketing service in need of a hardware platform to link with its customer, Virgin.net.
The tie-up resulted in a tethered WebPad that provides Internet service and information tailored to consumers in the United Kingdom.
Brokering such alliances is not a role semiconductor companies traditionally serve, but it's one National has embraced to enable a market for Internet appliances. While the ultimate aim is to sell more of the chips it builds (National said it can supply 65% of the analog- and digital-IC content of non-PC Web-access devices), in most cases its IA customers don't even consider its deep Silicon Valley roots.
"Three-fourths of the phone calls I get are from people who don't think of us as a chip supplier," said Michael Polacek, vice president of National's IA division in Santa Clara, Calif. "They're looking at us as a solutions provider for getting a successful information appliance into the market."
Above all, channel partner matchmaking has helped set National apart from the scores of other chip suppliers laying claim to this nascent field, company executives said.
In the 18 months the IA division has been in existence, it has logged more than 120 customer design wins, spanning commercial and consumer categories of both the wired and wireless variety, National said. Based on this number, the company claims to own 80% of the IA-components market, which this year is estimated to represent a little more than 1.5 million units, largely made up of enterprise thin clients and a smattering of tethered personal-access devices.
But an array of Internet appliances unveiled last week has muddied the waters for microprocessor vendors trying to dominate the emerging market.
At least three processor suppliers are involved in Compaq Computer Corp.'s new product lines alone, which is indicative of the MPU fragmentation in the first wave of handheld and home stand-alone Web surfers coming to market. Intel's StrongARM is used in Compaq's Pocket PC, while two wireless e-mail and pager Blackberry models use embedded Intel 386 processors. Compaq's MP3 audio player uses Cirrus Logic's Maverick DSP, and the home-network connector uses a Toshiba MIPS MPU.
One IA newcomer, flat-panel-monitor OEM ViewSonic Corp. of Walnut, Calif., has unveiled a generic handheld Internet wireless device to be sold in large quantities to corporate customers using whatever processor is desired.
A second FPD monitor company, Proview International Holding Ltd., Hong Kong, last week announced it is jumping into the handheld-IA market, but will use only National's Geode chip at the heart of its units.
A box score of microprocessors showed Hewlett-Packard and Sega Enterprises each using Hitachi SH processors for separate Internet-access units. Casio and Agenda Computing are each using an NEC MIPS VR4121 processor. Palm is currently using Motorola's Dragonball MPU in its first wireless model for Internet access, although sources said it is considering upgrading to ARM MPUs in future models.
The joint venture of Gateway and America Online, which is developing an Internet appliance, has tapped Transmeta's Crusoe processor. Fujitsu will be the first OEM to market an Internet-access unit using Sun Microsystems' new PicoJava processor design.
Microsoft's PocketPC reference design uses Intel's StrongARM processor, a big boost for the MPU giant, which up to now has seen rivals snatching an increasing share of handheld Internet platforms.
The crowded processor ranks are expected to start thinning out next year. Some Internet-access aspirants are predictably going to fall by the wayside, taking their MPU chips with them. Other processors may find themselves replaced as OEMs upgrade the pioneering Web-surfing devices to next-generation units.
Analysts say it's too early to say who will win or lose. But measured in terms of reference designs, National appears to be the front-runner, said Joyce Putscher of In-Stat Group, Scottsdale, Ariz. "There've been quite a few announcements by companies using National's WebPad platform. That in itself speaks to a fairly widespread acceptance of National's solution," Putscher said. Other platforms that don't offer as much in the way of a total package are "not widely accepted," she added.
Although National's $2 billion in revenue is today almost exclusively from silicon sales, about one-third of the IA division's R&D dollars are spent on system design and software development, Polacek said. National offers reference designs that do 80% to 90% of the system design work before it's handed off to an outside design house, contract manufacturer, or the customer to polish up, he said.
The IA division has also created a separate sales organization to call on its customers' customers. Unlike in the PC market, where specifications, suppliers, and retail or service channels are well defined, in the IA space, all of these are still emerging. Add to this the array of operating systems, form factors, peripheral connections, and network interfaces, and the options are mind-numbing.
"We're selling the business model, and that means doing a lot of the matchmaking" bringing together OEMs, software and hardware developers, ISPs, and retail channels, Polacek said. "It's been a huge undertaking for us as a company, but it's what you have to do to become a leader in this market."
Additional reporting by Jack Robertson