Digital video chip maker C-Cube Microsystems – whose net profits skyrocketed 235% last quarter (CI No 2,957) – says it’ll be the top chip vendor for digital video disc (DVD) by the end of this year due to new deals with major consumer electronics companies.The Milpitas, California-based firm is also set to announce six more licensees for its Zoomed Video chips in the next couple of months having already signed up four top-name PC vendors. C-Cube says it has sewn up 90% of the set top box video encoder market, and sees little competition in any of its four business lines. C-Cube has about $107.1m in cash and equivalents on its mid-year balance sheet (not including debts); a big wad for a company of its size.The firm has even won an Emmy, which the awards body doled out after noting that nearly all digital video is encoded on C-Cube encoders. So where is all the money – and all the deals coming from? C-Cube never says the word monopoly, preferring domination and uniquely positioned, but with its May acquisition of digital video networking firm DiviCom Inc, C-Cube can now offer end-to-end digital video networking encoding and decoding. One of the biggest benefits of DiviCom – which used to be C-Cube’s biggest customer – is that it gives C-Cube more visibility to customers. Now when Divicom wins a deal with, say, US West Communications for a set-top box specification, C-Cube will naturally provide the silicon. Despite the flavor of the month pace of the industry, C-Cube is betting on digital video as the hot technology for the next 50 years as the analog world slowly evolves into digital technology. C-Cube was at the genesis of the MPEG-1 standard and hasn’t strayed from digital video into other markets and doesn’t plan to. The firm’s product areas include DVD, which it predicts will take off in the US with the advent of the better quality MPEG-2 standard. We have a number of design wins in this area that we haven’t announced that involve household name companies, said Alex Daly, C-Cube’s VP for marketing. It has a strong presence in set-top box designs and chips. Its Zoomed Video PCMCIA card chips are becoming a de facto standard, having been adopted by Toshiba Corp, Panasonic Corp, Texas Instruments Corp and Compaq Computer Corp. And it predicts its DVD efforts for PC-TVs will grow as that market develops. C-Cube appears to have a couple year’s lead in many of these markets, having announced the fourth generation of its CL482 single-chip VideoCD decoders, at a time when some companies are struggling to release their first. C-Cube is open to new acquisitions next year. We’ve got a lot of cash in the bank and we’re always looking at opportunities, but we’ll take time to digest DiviCom first, Daly said.
