AT&T debuts modem pack for laptop, notebook market

Electronic News, March 9, 1992 by Andrew Collier

BERKELEY HEIGHTS, N.J. -- AT&T has introduced a low-power modem package for the laptop and notebook market, opening that segment of the market to greater competition and posing a potential challenge to vendors of traditional modems who also happen to be customers for AT&T's modem data pumps.

The package from AT&T Microsystems includes three devices comprising the data pump, along with a modem controller that supports the AT Command set and key error correction and data compression protocols, including V.42 and V.42bis, and MNP4 and MNP5.

The V.32 and V.32bis standard fax/modem package, manufactured by AT&T, operates at 38,400 bits per second for data and 9,600 for fax. Lacking only a power transformer, a data access interface and the external box, the laptop modem package is virtually equivalent to a stand-alone modem.

The V.32-plus-fax LapTop Complete Modem chip-set is priced at $105 in qualities of 10,000 units. The V.32bis-plus-fax Desktop Complete Modem chipset is $89 in quantities of 10,000.

Designed to be implemented as a stand-alone device or to slot into the rapidly expanding notebook market, the AT&T package could begin eating away at the market share held at the low end by traditional modem vendors.

AT&T Microsystems isn't the first chip vendor to take this route. About two years ago its prime competitor, Rockwell International, began shipping a complete modem package called the AC series. It includes the AT command set, a widely used communications code designed by Hayes, along with error correction and data compression.

But AT&T recently swept by Rockwell in attracting modem customers because of its introduction of a low-power modem chip-set called DSP16A. The chip-set is part of the new complete package AT&T is offering.

A modem vendor warned that in taking these steps, AT&T and Rockwell are running the risk of losing their mainstream customers. "For AT&T and Rockwell, they have to weigh the importance to their business of people like us, and what they think they can get making modems," said tom Heimerman, director of sales and marketing for Multi-Tech Systems Inc. "That can be a thin line." Multi-Tech uses modem data pumps from both AT&T and Rockwell's Digital Communications division. Since the two firms are the market's dominant suppliers, it is not clear how much maneuverability their customers have in seeking other sources. $TSimilarly, Dale Walsh, vice president of advanced development for US Robotics, thinks the AT&T move could affect USR sales to laptop vendors. Asked if AT&T's package was a threat, he answered "Yes, it could be, if laptop manufacturers wanted to use it directly." $THowever, top-line companies like USR and Multi-Tech argue they provide significant features not available from AT&T and Rockwell, whose low-end modem packages are more likely to affect generic modem providers, particularly from low-wage countries, than sophisticated stand-alone modem vendors.

"We tend to keep our own personality," USR's Mr. Walsh said. He criticized modem vendors who believe they can buy the AT&T package and quickly churn out modems. "I don't know how easy it is to take a chip-set and fly," he said.

Mr. Heimerman said Multi-Tech adds features like automatic settings for Unix and IBM AS/400 machines, and automatic default configuration, that the chip makers don't have.

Mark Hunzinger, director of marketing with modem vendor Telebit Corp., agreed. "We think our implementation of MNP and V42 is better than theirs," he said. But he worries about competition from new entrants. "Joe Modem co. can spring up overnight and sell modems from his garage" using the AT&T package, said Mr. Hunzinger. As with US Robotics, Telebit argues its code and overall product is superior to one thrown together by a vendor buying the chip-sets from AT&T.

Global Village Communication, a small company in San Francisco, is using the AT&T package in a modem for customers of Apple's new notebook, the Powerbook. "Rockwell provides such a complete solution, and they sell that to someone with extra board-stuffing capacity," said Ray Kelly, a regional manager with modem vendor Digicom of Milpitas, Calif. "AT&T is going in that direction, too."

Mr. Kelly questioned the assumption that the code written by traditional modem vendors is superior to that from the so-called "board-stuffers" using pre-packaged chip-sets. "Now everybody has pretty much the same algorithms. They're transparent to the user," Mr. Kelly said.