The convergence of interactive video and broadband communications was underscored last week when communications heavy hitter Broadcom Corp. and video IC pioneer C-Cube Microsystems Inc. disclosed their separate strategies to extend beyond their core competencies and deliver set-top-box (STB) solutions.
Looking to lock up design wins by offering complete chip solutions for next-generation STBs that offer features like video-on-demand and interactive-television services, both companies joined a growing number of IC suppliers positioning themselves to offer a cross-pollination of video processing and communications capabilities.
After entering the communications market late last year to offer a combined cable-modem and codec-chip solution for STB applications, C-Cube told EBN that it has plans to expand its broadband offering for STB home networking applications by entering the DSL market this year.
Meanwhile, Broadcom's president and chief executive, Henry Nicholas, said during a conference call with analysts last week, that amidst mounting customer inventories and slowing PC sectors, its broadband chips combined with its newly acquired video processing technologies would see significant growth in the STB sector and that Broadcom, Irvine, Calif., planned to leverage its technologies in the space.
"The most significant financial event that'll happen in the [cable modem and STB] market is really the transition from broadcast only to interactive," Nicholas said.
"There are some very significant elements occurring in peoples' STBs, which are very sophisticated elements that require leading edge cable-modem technologies and the integration of cable-modem connections into a back-end, video processor for gaming, or to watch, record, and store video to be distributed throughout the house."
Motorola recently selected Broadcom's video processor for its next-generation STB that Nicholas reported contained a 3-D graphics capability that was derived from its acquisition of Stellar Semiconductor last year. "In this case, we'd gone head-to-head against an established stand-alone, graphics-chipset supplier who had previously established market leadership in the PC field, and we've now gone to essentially establish a leadership position in the STB market place," Nicholas said.
Meanwhile, C-Cube, Milpitas, Calif., is looking to enhance its video-processor technologies through its planned entry in the DSL space via strategic partnerships or acquisition.
"We're just starting to look at DSL, because now with Direct TV and broadcasting local channels over DSL and then when MPEG-4 comes along, it's more interesting," said Patrick Henry, C-Cube's vice president of marketing and corporate development. "[DSL] digital gateways and home-media servers are obviously going to become more important servers in the digital home."
On a video-processor level, offering OEMs a complete solution with a somewhat open architecture to accommodate MPEG-2 for one-way broadcasts and intellectual property protocols for interactivity and streaming video is crucial for convergence applications, Henry said. "While streaming video will not replace MPEG-2 in the near term, the capability to support MPEG-4 and other streaming video types in addition to MPEG-2 is important, which is why we've included multiformat capabilities in our Domino architecture."
But are silicon solutions that offer OEMs a single-source supply of video-IC convergence devices combined with front-end broadband connections what OEMs really need? The obvious answer is that a single-source supplier will help bring down prices, but trade-offs do exist, analysts say.
"Whether or not the equipment OEMs use these single-source offerings is a double-edged sword," said Alvin Kressler, an analyst at Kaufman Brothers L.P., New York. "While integrated products typically offer a lower cost than point solutions, they take up less space and use less power. However, they can lock an OEM to a single source of supply, which can reduce the OEM bargaining power on pricing longer term and open the OEM up to supply risk."
For Motorola's Semiconductor Products Sector's imaging and entertainment solutions division, which supplies the set-top box used in Blockbuster Inc.'s and Enron Broadband Services video-on-demand services now in test deployment, OEMs are more apt to pick and choose parts from various suppliers while relying more on honing their STBs through software modifications.
Indeed, Motorola's STB used in the Blockbuster and Enron venture employs a GlobeSpan DSL modem processor interfaced with Motorola's Streamaster chipset and is open to upgrades based on software without changes in the basic hardware design, said Vernon Reed, manager of strategic and customer marketing at SPS' imaging and entertainment solutions division.
"Our strategy has been based on a software video-based solution for the most part," Reed said. "There's good reason for that because you have the flexibility to adapt to the dynamics of compression standards and everything else that you can't do in the hardware solution world. You pay more for it up front, but for a hardware solution, when you throw the box away you bring 37% of the cost to the network again just to add enhanced services."
In addition to Broadcom and C-Cube, other companies have either begun or plan to bridge communications and video processors for home-gateway solutions, analysts and industry sources said. Traditional heavyweights likely to offer STB OEMs complete solutions include Conexant, Intel, STMicroelectronics, and Texas Instruments.
"There's a number of them looking at extending their product offerings from the video space, the games space, etc. into this market," Reed said. "What's out there now is only the tip of the iceberg."