July 15, 1999 2:40 PM PDT

Intel, Cisco hook up for DSL modems

As part of its Internet push, Intel will begin offering fast modems that connect via plain telephone lines as it moves into the broadband products business with a little help from Cisco Systems.

Intel said today is has entered into a technology agreement with Cisco to develop, manufacture, and market a line of digital subscriber line (DSL) modems for personal computers. DSL is a technology that allows existing phone lines to handle simultaneous high-speed Internet and voice traffic.

The deal is another step in Intel's shifting away from reliance on its traditional chip business. In the last two years, Intel has made several deals and is getting involved in more technology as it seeks to expand its business.

Intel's first DSL products are expected to begin shipping later this year. The two companies will work to make sure the modems can talk to the equipment Cisco sells to telephone companies and other service providers.

In essence, Intel will begin to compete against other DSL modem makers such as Alcatel and 3Com.

With competition in the PC market continuing to force cuts in Intel's main chip business, the company has been looking to high-growth areas such as communications technologies. In addition to offering up building blocks for networking and communications products such as modems, Intel is also looking to provide products and services for Internet service providers (ISPs) such as Web hosting, for instance.

"The DSL Market is going through a transition because of the compatibility and standards movement," said Mark Christensen, vice president and general manager of Intel's Network Communications group. "The traditional companies have had to do end-to-end solutions, like Orkit, Alcatel, or Cisco," to make sure equipment could pass data back and forth, he said. But now with interoperability standards, companies will begin to focus on different parts of the picture, creating room for Intel's entry into the market for end-user modems.

In the near term, Intel's products will be available through service providers such as Covad, Northpoint, and Flashcom.

In another year to 18 months, Christensen said that more PC makers will ship DSL modems built into computers, and more retail stores will begin carrying DSL modems. And Intel plans to offer products to those sales channels, he said.

Move helps Cisco in hot market
Cisco's plans to enter the consumer market and work with Intel were initially reported by CNET News.com in late 1997. They were further flushed out late last year.

By entering the consumer space and aiding Intel's DSL efforts, Cisco in the long run hopes to sell more back-end equipment at the other end of the DSL wire.

Broadband hardware, such as DSL and cable-based routers and management systems, are one of the hottest fields in the networking industry. Young firms such as Redback Networks and Copper Mountain Networks have ridden interest in the market to public stock offerings.

Another entrant, Efficient Networks, soared in its debut today.

More established firms, such as 3Com, are betting on adoption of high-speed technologies such as DSL and cable-based modems to drive turnaround strategies going forward.

 

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