Lucent Unveils Internet Phone Chips : Plans to roll Internet phone SOC in 2000

Electronic News, May 17, 1999 by Jerry Ascierto

Las Vegas-Lucent Technologies Microelectronics Group last week at the Networld Interop trade show here said it will offer a line of highly integrated devices targeting the Internet telephone market.

By integrating multiple system-level functions on a chip, Lucent said that it can reduce the electronics costs of currently available Internet telephones by about 30 percent. In the future, Lucent said its system-on-a-chip (SOC) technology could decrease the number of semiconductor chips required for Internet telephones from five to one.

Lucent tentatively is planning to release a single chip Internet telephone device in the summer of 2000.

"We're watching very carefully, since this is an emerging market, to see who the dominant players will be," said Caleb Strittmatter, Lucent's marketing director for enterprise IP telephony. "We also envision the possibility of using our ASIC Bell Labs resources to target a very specific solution for a major player."

The planned device will integrate 13 electronic functions onto a single chip.

"Packing more functions on a single semiconductor chip has been pivotal to decreasing costs and growing the market for cellular phones," said John Dickson, president of Lucent's Microelectronics group. "Now, we are applying our system-on-a-chip expertise to help ignite the Internet telephone market."

To meet immediate needs, Lucent will offer a two-chip device by the fourth quarter, priced at $30 in 100,000s. The initial two-chip version will house the digital signal processor (DSP) and microprocessor on separate chips.

Lucent's SOC could significantly reduce the prices of Internet telephones. Growth in the Internet telephone market has been dampened by high prices, analysts noted.

"The Internet telephone market has been limited so far by prices that now hover in the $250 range," said Greg Sheppard, an analyst with the market research firm Dataquest, San Jose. "Lucent's highly integrated system-on-a-chip addresses the key market stimulant of cost reduction that will help lower Internet telephones prices below the $150 range."

The market for Internet telephone sets is expected to average annual growth of more than 250 percent for the next three years, amounting to 8.8 million units sold by 2002, according to Dataquest.

In a separate announcement, Lucent also unveiled a single-chip offering for the ISDN equipment market, which the company claims will reduce silicon costs by about 30 percent and power consumption by more than 20 percent, compared to comparable, existing products.

The chip, called the T9000, integrates a microcontroller with ISDN Network Termination Node (NT1) functions and memory, and supports two analog phones. Samples of the T9000 are available now, with volume quantities scheduled to be available in July. Pricing is $10 each in 25,000 quantities.

"As the demand for ISDN services continue to grow, especially in Europe, new communications chips...are increasingly critical in bringing ISDN services into the home at lower costs," said Ben Evert, marketing manager for the Microelectronics Group.

More than 40 million ISDN lines are expected to be in service by the year 2002, according to Dataquest.