SAN FRANCISCO -- Cable modem is kicking butt in the market for high-speed Internet access to US homes, an executive for Broadcom said Thursday.
CFO William Ruehle said cable-modem installations had outpaced high-speed telephone-line installations by 14 to 1 by the end of 1998. Broadcom supplies chips for both technologies.
The market for cable modems was "beyond our expectations," Ruehle said at a Nationsbanc Montgomery technology conference in San Francisco. But so far, high-speed digital subscriber lines, or DSL, that run through telephones represent "more words than modems."
Cable modem's growth will be pushed even harder this year by AT&T's acquisition of Tele-Communications Inc., the largest cable-TV provider and the owner of cable-modem leader At Home, Ruehle said. Increased use of digital-television technology over cable systems will also boost the cable sector.
Cable modems reached 700,000 installations by the end of 1998, Ruehle said, citing recent market-research figures. By comparison, only about 50,000 high-speed telephone lines had been installed.
Broadcom makes computer chips that are embedded in cable modems, and it also supplies chips used in DSL modems. It specializes in chips that carry voice, video, and data.
"We are the arms' merchant," said Ruehle. "We are aggressively pursuing both those markets [cable and telephone]."
The US$300 price range for cable modems is a barrier to entry for some consumers, but Ruehle said the price will soon fall to the $150 range, spurring the market's development.
Broadcom's chip prices are also likely to fall, but the company plans to compensate with "an increasing silicon share of broadband solutions," meaning its chips will be engineered to perform more of the specialized functions of set-top boxes and cable modems.
Broadcom's quarterly revenue has surged more than tenfold since the start of 1997. Its quarterly revenue then was $5 million; in the most recent quarter, its revenue climbed to $70 million.
Ruehle said the company expects to grow with the booming cable modem and digital television markets.
Copyright© 1999 Reuters Limited.
