GI Bolsters Content, Forms IP Division


General Instrument Corp. made a series of strategic moves
last week, as it pivoted toward the next wave of digital set-top applications.

Simultaneously, GI picked up the glint of the financial
community's spotlight. Continued speculation about Lucent Technologies' next
acquisitive move -- which, so far, has buzzed around a laundry list of equipment
companies, like 3Com Corp. and Philips Broadband Networks -- spun toward GI and Antec
Corp. last week.

Last Tuesday, GI took a 5 percent stake in Spyglass Inc.,
with room to add up to 5 percent more. With Spyglass, GI will create a $20 million
software-integration facility, located near a large Spyglass facility in Cambridge, Mass.

David Robinson, senior vice president and general manager
of GI's digital-network-systems group, described the Spyglass arrangement as a way to
accelerate the company's "Horizons" content-development group. Horizons
developers are seeking new ways to exploit the many facets of GI's forthcoming
DCT-5000 set-top, which comes with a built-in cable modem.

Last Thursday, GI formed an IP-networking (Internet
protocol) business unit, described by chairman and CEO Ed Breen as the way that GI will
move into data- and telephony-gear suppliership. Dan Moloney, GI's longtime analog
set-top guru, will lead the unit. He was named senior vice president and general manager
of what is being called GI's advanced-networks and telecom-systems unit.

The two moves were partly linked to an expected earnings
statement from GI this week, financial analysts said. That quarterly report also created
the Lucent/GI buzz -- especially since regulatory restrictions prohibiting Lucent from
acquisitions (as part of its spinoff from AT&T Corp.) were lifted earlier this month.

At the Networld+Interop show in Atlanta last week, Lucent
president and CEO Roger A. McGinn obliquely said that part of Lucent's going-forward
business strategy included acquisitions. He wouldn't elaborate.

GI executives also declined to comment on the Lucent
rumors, or on the delayed status of what was to be a $188 million investment for 5 percent
of GI by Sony Corp.

Meanwhile, over at Spyglass, executives were gearing up to
lend a hand in what is, to some degree, foreign territory for cable operators moving into
the digital realm: application program interfaces, middleware and operating systems for
set-top units.

Paul Chapple, manager of TV technology for Spyglass, said
the GI arrangement helps GI and its customers -- the largest of which is
Tele-Communications Inc. -- to tap into Spyglass' knowledge bank of understanding
about Internet techniques, APIs and the looming world of software interfaces.

"They're experts at hardware, and they said,
'Let's grab this software company that already works with Microsoft [Corp.], Sun
[Microsystems Inc.] and the others,'" Chapple said, explaining GI's mandate
to incorporate downloadable operating systems from a variety of software firms.

Chapple said that as set-tops get more complex -- which the
DCT-5000 clearly will be -- they also add more value, "especially if there are people
around who understand the software side."

Robinson was quick to point out that the new GI/Spyglass
facility isn't aimed at content developers, but more at the middleware tool sets that
those developers will need to be successful.

"We don't want to compete with applications
providers, and we don't want the lab to compete with them," Robinson said,
asserting that the lab is aimed at facilitating those developers.