Chip Seen as Major Step for Interactive TV
In a major boost for Internet access through cable TV, Irvine-based Broadcom Corp. is expected to introduce today a single graphics chip that contains the circuitry needed to make interactive television services more attractive and easier to use, and set-top cable boxes more functional.
The chip, which works inside either a digital or an analog set-top box, allows consumers to see a blend of high-resolution digital images, graphics and broadcast video at the same time.
Cable operators see these new digital boxes as a key weapon in their competitive battle with satellite television services, as the devices allow operators to offer more TV channels. And the growing demand for these products is part of the reason Broadcom’s stock price has jumped more than 230% since its Wall Street debut in May.
By packing the circuitry for meshing TV signals and computer graphics onto one chip instead of several, Broadcom is expected to sharply cut the cost of home equipment for the emerging interactive-TV market, according to industry analysts.
Broadcom’s announcement feeds into an industrywide push among both cable operators and the PC world to make set-top boxes smarter, faster and more powerful. For the past couple of years, the two industries have been fighting over how to get high-speed Internet access to consumers and what kind of device the public will use to get this service.
Microsoft Corp. envisions its WebTV offering as a solution for this convergence of broadcasting and interactivity, while Tele-Communications Inc. Chairman John Malone has promoted the idea of a “walled garden” of basic online information and retailing services for cable customers.
“The more sophisticated the service, the more advanced the interface has to be,” said Jonathan Cassell, a senior industry analyst for the research firm Dataquest. The new Broadcom chip “is a pretty big step up in the quality of graphics that can be seen on a TV set.”
Broadcom’s chip also will hasten the connection of phones and other devices to TV cable, technology analysts said. Traditionally, cable set-top boxes have been simple machines that performed even simpler tasks. Compared with what a personal computer could do, they were seen as “dumb” devices.
But the emergence of digital set-top boxes, armed with computer memory and a high-speed modem, would give cable operators the ability to finally deliver on the long-promised dream of interactive digital television. These next-generation devices would allow consumers to surf the Internet quickly through their TV sets, look at Web pages, send e-mail and shop online.
“Today, one of the major problems is the images look really bad and, until now, you couldn’t have a broadcast and a Web page together on the same screen,” said Gerry Kaufhold, principal analyst with Cahners In-Stat Group, a Scottsdale, Ariz.-based research group that tracks emerging high-tech markets. “This Broadcom chip lets you do that with one chip, not several.”
The prospect of mass adoption of cable modems and set-top boxes was a major incentive for the development of this new chip, said Tim Lindenfelser, vice president of marketing for Broadcom.
Analysts estimate that by the end of the year, 500,000 households in the U.S. will be getting Internet access through their cable operator. Sources at Comcast Cable say the company is installing 5,000 digital set-top boxes a week and has plans to upgrade them every 18 months.
Broadcom plans to demonstrate its new chips to its customers this week, said Lindenfelser. In the cable market, the firm’s clientele includes device manufacturers Sony Corp., Scientific-Atlanta Inc. and General Instrument Corp.
