Posted on 11/19/2002 6:47:38 AM PST by Ernest_at_the_Beach
Innovation is focus of Comdex show
Knight Ridder Newspapers About 1,100 tech companies are showing off their wares at the Comdex trade show. That includes high-end gear like GeForceFx graphics chips from Nvidia and a $2,999 laptop from PC Laptops that runs at 2.8 gigahertz. On the low end are $15 IXLA disposable digital cameras. Nvidia is showing its much-delayed graphics chip, which sales executive Dan Vivoli says will be up to twice as fast as graphics chips from rival ATI Technologies (no way, says ATI) and able to come much closer to the lifelike quality of animated films. Another leading-edge device is National Semiconductor's Geode Extended Office, a handheld computer that runs the full Windows XP operating system. Devices like this will push the PC from center stage, but they will still be connected to PCs. "The PC stays important as the reservoir of all of your digital content, from your pictures to your music," said Brian Halla, CEO of National Semiconductor. "But the gadgets that connect to the Internet, whether they be cell phones or handheld computers, are going to be driving any recovery that we have." The Comdex crowd is hearing from speakers such as Microsoft Chairman Bill Gates, Hewlett-Packard CEO Carly Fiorina and Sun Microsystems CEO Scott McNealy.
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Tuesday, November 19, 2002
Router rivalry
Cross-town wireless networking competitors D-Link and Linksys both on display at Comdex.
By TAMARA CHUANG
The Orange County Register
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LAS VEGAS – Two Orange County high-tech companies are rivals who go head-to-head in the marketplace with similar products but different strategies – for almost everything. Linksys Group Inc. and D-Link Systems Inc. even adopted different tactics for this week's huge Comdex computer show in Las Vegas, where both companies are showing off their home-networking products. The Linksys exhibition booth is in the midst of the crowds in the Las Vegas Convention Center. D-Link displays its wares away from the clamor in a suite at the Venetian Hotel about a mile away. The competition between two of the biggest names in home computer networking is reminiscent of many former high-tech rivalries – such as between chip makers Broadcom Corp. in Irvine and Conexant Systems Inc. in Newport Beach, personal-computer makers IBM and Apple, and browsers Internet Explorer and Netscape. "Rivalries are driving the market," said Steven Joe, president of U.S operations for D-Link. "It's creating pressure to stay competitive." The Linksys-versus-D-Link rivalry is fueled by the growth of computer networking, which has become one of the hottest, and most competitive, tech industries. The number of home networks worldwide is expected to grow to 16.6 million this year, up from 10.5 million last year, according to market researcher Instat/MDR. Today, it's a $1.4 billion-a-year industry. Linksys has 25 percent of the wireless-networking market, while D-Link has 15 percent, according to Instat/MDR. But the two Irvine companies are feeling pressure from smaller competitors, such as Irvine's SMC Networks and Silicon Valley's NetGear, and also from Microsoft Corp. , which recently entered the market. Toshiba America has said it, too, is interested in introducing a networking hardware kit in the near future. The competition not only benefits consumers. Linksys managers know they can cheer up employees by making jokes at the expense of their cross-town rival. Diana Sugihara, Linksys marketing programs manager, used that technique last week as she urged employees of the computer networking company to act more professionally at this week's Comdex trade show. "Last year, there was a picnic at the booth. Chips were everywhere. Please, eat at D-Link's booth and then come back," she joked. Different focus
Both companies began as business networking firms, but D-Link remained focused on business networking for longer than Linksys did. Until recently, few people had high-speed Internet and more than one computer at home – there wasn't much need for routers to link them into a home network. The growth of broadband and computers changed D-Link's strategy.
"The first five years, we never heard the word 'user experience.' We were all engineers," Joe said. "The last three years, we've been heavily 'consumer.' "
The change has made D-Link look more like Linksys. But the two still have their distinctions, said Navin Sabharwal, who tracks the networking industry for market researcher Allied Business Intelligence.
Mainly, Sabharwal said, "When you look at Linksys boxes, they package them for the consumer. ... For D-Link, more people who buy it do it because they have a business." Other differences between the two firms, which are seven miles apart in Irvine:
D-Link manufactures its products in its own Asian factories; Linksys contracts out the work.
Linksys dominates the U.S. market, D-Link is stronger in Taiwan. Linksys has 1,054 employees, including 350 in Orange County; D-Link has 2,000, including 230 locally. The majority of D-Link's employees are engineers. At Linksys, most are in sales, marketing and tech support. D-Link integrated "turbo" chips into wireless products for speeds of up to 22 Megabits per second. Linksys stuck with industry-approved standards, at a slower 11 Mbps.
D-Link had revenue of $500 million last year, including products that it makes for sale by other networking companies. Linksys had revenue of $347 million – all from products sold under its own brand name. Still, even analysts get confused sometimes. "Linksys is much more in the home, and D-Link is much more in small business," said Gemma Paulo, an analyst with Instat/MDR who tracks the home wireless-networking market. "But it's getting really getting hard to tell them apart." HISTORY
In the late 1980s, the two were Orange County start-ups. Both sold computer networking products, with manufacturing done in Asia.
They were even business partners. In the mid-1990s, they made different strategic decisions about how to handle manufacturing. Linksys expanded its relations with other manufacturers; D-Link kept control of its own manufacturing. Linksys Chief Executive Victor Tsao said, "We had made a business decision ... to expand our relationships with other manufacturing vendors that would enable Linksys to augment our product lines," said Victor Tsao, president and chief executive of Linksys. "In order to grow and stay competitive, it best serves us and our customers to evaluate our relationships with vendors and make changes when needed to adapt to our goals and business strategies." Linksys has stuck with this strategy, although that means it has to rely on others to do its manufacturing. Executives argue that this strategy allows Linksys to keep in touch with top manufacturers who are experts in their product – and not rely on one.
For D-Link, controlling its manufacturing means that it can develop its own products faster and do the job cheaper, which keeps prices low for consumers. "When technology is moving so rapidly, and there are significant shifts in price monthly, it's difficult to merge that evolution of price, performance and standards if you're not controlling (manufacturing)," said Greg Avera, vice president for channel sales at D-Link. So far, Linksys is ahead in the competition. Its executives even say the company doesn't consider D-Link a competitor. They claim to have half the market for wireless networking products, rather than the 25 percent that Instat/MDR estimates. "The minute Microsoft jumped into the market (in September), you started to see stratification of the market," said Mike Wagner, Linksys director of marketing. "Now, you're seeing everyone separate into tiers. In Tier 1, there's Linksys, NetGear and Microsoft. Tier 2 has the others. In Tier 1, they understand the customer and have a defined strategy."
On the D-Link side, the goal isn't to be first, Joe said.
"We don't think about it," he said. "For me, we want to make it on our own efforts. There's plenty of room to compete."
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