It was one of those one-liners that make you put the paper down and say, "Hmmm. How could that be?"
The last sentence in a consumer-electronics trade magazine article about Thomson Consumer Electronics (the RCA folks) said simply, "Thomson has become the nation's leading supplier of digital-cable modems."
Not on any list that I've ever seen!
At the risk of being a journalistic snitch (and particularly awkward, as that article appeared in another magazine put out by the smart and friendly folks here at Cahners Business Information), I checked the usual sources. Thomson isn't on any of the best-seller lists for cable modems.
According to Dataquest (part of the renowned GartnerGroup), Thomson held a scant 5.6 percent market share during the first half of this year. Motorola Corp. still dominates the cable-modem world, with a 40 percent worldwide share of the installed base; its cable modems are still selling briskly, although its latest quarterly market share is down to about 37 percent.
On Dataquest's cable-modem market-leader list, first comes Terayon Communications Systems Inc. (with 14 percent of U.S. sales in the most recent quarterly report), then 3Com Corp. (13 percent), Com21 Inc. (9 percent) and Toshiba America Consumer Products (7.5 percent) as the only other sizeable producers.
Patti Reali, who runs the Dataquest numbers, pointed out that Thomson's reach is limited because its cable modems are sold almost entirely in North America, while most of its competitors sell throughout the world. Reali added that the past few months have seen the "very strong emergence of the Asian original-equipment manufacturers (OEMs), which took almost 23 percent of total worldwide market share."
The Gartner Dataquest study also identified a growing cadre of manufacturers who collectively accounted for about 23 percent of the total cable customer-premises equipment shipments during the second quarter of 2000. Reali lists Xrosstech, Askey Computer Corp., E-Tech, Turbocomm, Samsung Corp., Castlenet, GVC Corp. and Joohong as those new suppliers concentrating on simple functionality, high volume and low costs.
That sounds like a good formula for a consumer device-even if the brand name is unfamiliar (which is not an issue since, at present, cable modems aren't in the retail-distribution chain).
And what did Thomson's spin doctor, who was cited anonymously throughout the initial story, have to say about being the "leading supplier" of cable modems?
He modestly observed that he'd like to see "some more adjectives.like 'DOCSIS [Data Over Cable Service Interface Specification]-certified digital-cable modems.'"
To which we wondered, "Which DOCSIS?" And in any case, DOCSIS accounted for only 68 percent of worldwide cable-modem shipments of about 2 million units sold during the second quarter, according to Gartner Dataquest.
To be sure, Thomson is also trying to establish a base in other consumer-data products, such as receivers for the Geocast data-broadcasting service, along with satellite data devices to accompany RCA's strong direct-broadcast satellite presence.
But this is not a tattletale about an editorial slip-up-or even a truth squad screed about accuracy in statistics. Rather, the cable-modem figures serve as another reminder of the industry's reliance on a handful of suppliers, and the process by which that status could change overnight if newcomers-the Asian suppliers-crack the market.
This onslaught comes during the periodic debate over whether cable modems or digital subscriber line services will dominate the residential high-speed market. The latest study by Allied Business Intelligence predicts comparable growth for both categories by 2005.
According to this research report, 14 million American homes will use cable modems within the next five years-and, possibly, a comparable number will be linked via DSL.
Although the scale of growth resembles the findings in numerous other forecasts, it still glosses over many questions about what it will take to run all those lines and equip all those desktops. That's why I enjoyed a dissenting word from a curmudgeon after my own heart.
Randy Fuller, marketing vice president at Emperative Inc.-a Waltham, Mass., firm that sells software to DSL and cable (as well as wireless data and optical providers)-opined, "Neither of these broadband access methods will grow to tens of millions of subscribers" in next five years. Fuller thinks provisioning cable and DSL service is too complex for either to reach mass-market acceptance.
Meanwhile, to capture market share, cable-modem vendors are starting stunt promotions. For example, Com21 just launched a sales incentive program to help MSO demonstrate broadband connectivity. For the rest of the year, any Com21 cable-modem buyer can download their choice of five Mattel Interactive titles for free, directly to their PC.
Such gimmicks may sway market share, but the industry still faces fundamental issues-such as retail sales, installation and price/value offers that are still questionable. Even as DOCSIS becomes more stable, engineers are privately asking if networks can support the digital-modulation schemes needed for viable commercial services.
Privately, they acknowledge, the answer is "no."
I-Way Patrol Columnist Gary Arlen rarely fact-checks his own coverage, screeds not excepted.