Com21, Microtune Ink RF-Tuner Agreement

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Hot on the heels of similar announcements from the modem units of Motorola Broadband Communications Sector and Cisco Systems Inc., RF-tuner maker Microtune Inc. inked a deal with Com21 Inc. last week to develop silicon-based RF-tuner products.

Com21 also made an undisclosed investment in Microtune, which has filed a statement with the Securities and Exchange Commission for a $57.5 million initial public offering, slated for September.

Citing a quiet period, Microtune officials declined to be interviewed for this article.

Microtune and its modem partners will be working to develop its next-generation, silicon-based "gateway" tuners, which are designed to be low-power-consuming products that conform to both Data Over Cable Service Interface Specification and PacketCable specifications.

DOCSIS and Packet-Cable are Cable Television Laboratories Inc. standards efforts addressing data- and voice-service delivery over cable networks.

Microtune has guaranteed Motorola and Com21 volume deliveries of its RF tuners, and will provide Cisco with tuner modules for its next-generation cable-access routers.

As the cable modem becomes integrated into the broadband-telephone interface-formerly known as the network-interface unit-Microtune and partners hope to carve a niche for components of that unit, which sits outside of the home and funnels voice, video and data inside.

In addition to creating a little pre-IPO buzz for Microtune, the announcements serve to highlight the significant role silicon-based tuners will play as the BTI becomes the gateway for voice and data services, Kinetic Strategies Inc. president Michael Harris said.

Currently, modems are outfitted with bulky "tuners in a can," or sheathed analog tuners, Harris pointed out. These tuners tend to burn up a lot of board space in a modem, while a silicon tuner is approximately one-fifth of their size.

Additionally, this year's shortage of RF tuners has been an "unexpected but positive driver toward silicon," he added.

Potentially, silicon tuners offer better performance using lower amounts of power-an important consideration, as network-powered telephony is the preferred option for cable operators.

The silicon-tuner market promises to be hotly con-tested, as Microtune noted in its SEC filing that every automotive radio, cable modem, PC/TV, set-top box, VCR and TV requires a tuner.

The worldwide demand for tuners could hit 310 million units by next year, according to analyst reports cited by Microtune.

In the cable sector, Harris cited Broadcom Corp., Conexant Systems Inc. and Silicon Wave Inc. as other major players in the silicon-RF market. Last month, Silicon Wave and Texas Instruments Inc. announced a reference design incorporating Silicon Wave's tuner with TI's cable modem. "Microtune and Silicon Wave are best positioned right now," Harris said.

He added that Com21 has historically done a good job of implementing RF tuners.

While silicon tuners for cable modems are not commercially shipping at present, Harris expects some to appear at a CableLabs certification wave, possibly this fall.

So far this year, Com21 has seen strong growth, according to vice president of marketing Buck Gee. He said 1999 sales were $95 million, while first-quarter-2000 sales were $41 million.

Gee added that Com21 will announce cable-operator trials of its voice-over-Internet protocol products later this year and into 2001.

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