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Goliath At Bay

“I still thought we would have to build all the software ourselves. I didn’t know Netscape was thinking the same way. But I went down to Netscape and got together with Marc Andreessen, who is a friend, and we had a real mind-meld on all this stuff. They were doing the software already. Netscape became our main software partner. It turned out that their browser is designed for multicast. And their proxy server is great for caching information and delivering it to users on demand.” Medin thinks that a key to making the system work is to distribute lots of cache through all the local points of presence.

With this kind of network, the teleputer might become not only far cheaper but also far superior to today’s PC. A now famous Gartner Group study shows that the average office PC costs $40,000 over five years when you factor in software and network maintenance.

Perhaps 75% of cumulative PC costs now come from staff support. @Home will supply tech support, maintenance and storage more efficiently, whether centrally by phone or at local headends.

For a glimpse of the future, visit Boston College, where cable modems supplied by Continental Cablevision are already becoming “addictive” to many students and professors. On the basis of this experience, Forrester Research is now predicting sales of some 7 million cable modems by the turn of the century. Medin thinks this estimate is conservative.

With cable modems you will come to demand wireless connectivity throughout your home or small office, so that your teleputers can link to the Net wherever they are without plugging them in to a connector or dialing up a connection. Only cable can accommodate such demands. “Internet PCs fit with @Home like ice cream and hot fudge,” sums up Medin.

Now the big question: Is it possible to build such a machine? “Sure it is,” says Medin. “Just take a Sony PlayStation, essentially based on a one-chip ASIC, and replace the CD-ROM connector with an Ethernet adapter. You’ll get 3D graphics, Dolby III sound, a 30- megahertz CPU controller, a memory access controller, and a 10-megabit- per-second 10BaseT link to your cable headend.”

Consternation Inside Intel
Here the new paradigm begins to threaten the cause and complacency not only of Bill Gates but also of the other master of Wintel, Andy Grove. When I ask him about such an ASIC solution to the problem of the $500 PC, consternation breaks briefly through the surface of his bonhomie.

He snaps: “I won’t comment on the fantasies of Brian Halla,” the former Intel manager now executive Vice-President of product marketing at LSI Logic. Yet LSI Logic offers precisely Medin’s PlayStation solution to the problem of cheap teleputers, free of Wintel code.

LSI Logic is the supplier of the workhorse chip for the PlayStation. Using some 2 million transistors, this integrated chip combines a 30- megahertz Silicon Graphics MIPS processor, a 60-MIPS geometry transfer engine, a direct-memory access unit, and Sony’s proprietary MDEC device (for hybrid MPEG and JPEG decompression) for full-screen video playback.

For a Netstation, the MDEC would be replaced with the appropriate decompression engines, and added to those would be Reed-Solomon and Viterbi error correction together with a cable modem module that receives 64-QAM signals and sends QPSK. Based on its experience with the PlayStation chip, which LSI Logic will be producing in volume on the world’s first commercial 0.25-micron fabrication lines, LSI Logic estimates that it could sell a teleputer on a chip for around $50 in volume.

This machine is the consummation of a long LSI Logic strategy. In the mid-1980s, the company suffered a serious crisis as NEC, Fujitsu and Toshiba all opened fast-turnaround design centers in the U.S. to deliver high-speed, high density gate arrays. At the same time, LSI launched a spinoff, Headland Technology, to make chipsets for PCs in competition with Chips & Technologies and VLSI Technology.

“Supporting Headland,” says Halla, “was like walking around with an open artery. Intel remorselessly sucks out all the margins in PC hardware.” Chastened by the Japanese in gate arrays, LSI learned from Grove not to take on Intel in PC markets.

To a company specializing in gate arrays and chipsets, these lessons were not inspiring. Then Wilf Corrigan, LSI’s salty founder and CEO—a Silicon Valley legend from Liverpool who previously played key roles at Fairchild and Motorola—underwent a triple bypass.

People talked of retiring him, giving him a title with a new consortium, U.S. Memories, where he might have learned not to compete with the Koreans in DRAMs.

Two weeks after surgery, however, Corrigan returned to work at LSI and developed a new strategy that would transcend the strategies of both Intel and the Japanese.

Under the new plan, LSI built state-of-the-art fabrication facilities and design tools that could enable creation of a software library of “CoreWare.” CoreWare programs would generate a large variety of key functions, from CPU kernels to signal processors and graphics engines, that could be deployed in weeks on single special-purpose chips tailored to high-volume applications mostly outside the Wintel ambit.

By 1995, this strategy was bearing rich fruit. The company announced it had developed a fab process that could place some 49 million transistors on a single sliver of silicon some 200 millimeters square. LSI released a series of bellwether high-volume devices that moved the company beyond the path of the PC, out into the network and into the consumer appliance. The Sony PlayStation chip ran 1995’s most successful CD game machine. LSI’s MPEG-2 decoder will go in the next version of RCA- Thomson’s hugely successful direct-broadcast satellite receiver. LSI also supplied the first ATM segmentation and reassembly chip for several key equipment companies, and the first 100-megabit switched-Ethernet solution for a fast Ethernet pioneer.

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