Downplaying the "killer app" approach to growth is a sign that the industry is resetting expectations to reasonable growth. That said, the use of Internet protocols to handle data, voice and video is a market that is bound to develop, given cost reductions in the underlying silicon.

There is a good deal of impressive engineering work going on among Austin companies in the voice part of the convergence puzzle. Legerity, from its base of subscriber-line interface circuits (SLICs), is making the biggest bet on voice-over-broadband (VoB).

This spinout from AMD last summer acquired Agere Systems' analog line card IC business for $70 million. That transaction should help Legerity in the broadband digital loop carrier market.

Legerity is rapidly expanding its VoiceChip family of VoB silicon products, including programmable voice codecs and VoB chip sets that combine SLICs and codecs into tightly coupled solutions.

Two things will be worth watching: Texas Instruments is keeping a wary eye on Legerity's push into programmable, DSP-based codecs, viewing that as a threat to its own VoB plans. Forward Concepts analyst Will Strauss said there are recent signs that TI may limit support in its own chip sets for Legerity's SLICs, and partner with Intersil and others.

And it will be interesting to see how Legerity and Infineon Technologies duke it out in the competitive voice-chip marketplace during the next few years.

General Bandwidth is another Austin-based company that has bet on digital voice. Its G6 switch allows telecom carriers to use their existing Class 5 switches to deliver voice over cable or DSL.

Before the telecom investment drought set in, General Bandwidth was considered Austin's most well-heeled startup, due in part to support from SBC Corp. Recently, General Bandwidth laid off two-thirds of its workers to conserve cash, even as it steadily gains design wins.

Matt Davis, Yankee Group's broadband access analyst, describes General Bandwidth as "a very forward-thinking company, kind of the last man standing" after the exits of Tollbridge, Jetstream and others. Overall, Davis said, voice-over-broadband is showing "slow and steady growth-voice-over-cable, in particular, is set to take off."

After all the hype, bugs and bankruptcies, the takeoff can't come soon enough for many in this town.

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