Market for fast modems set to soar

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Modem makers are readying aggressive marketing plans to peddle 56K modems, a market almost sure to boom now that the industry has settled on a technology standard.

Rival camps for the past year have battled over two alternative standards for the higher-speed modems. 3Com Corp., the No. 1 retail modem marketer, pushed its x2 brand and technology. Rockwell Semiconductor Systems and Lucent Technologies, which make chips for most other modem marketers, pushed the rival K45flex.

PC users, meanwhile, sat on the sidelines. At 3Com, 56K modems in recent months have accounted for just one-third of retail sales, with the rest going for older, slower 33.6K modems, said VP-Marketing Neil Clemmons. "56K sales have done well, [but] they didn't do as well as we would have liked," Mr. Clemmons said.

The International Telecommunications Union this month affirmed a new industry standard, V.90, for modems that carry up to 56,000 bits of data per second, ending the standoff.


Analysts expect the 56K modem market to soar as PC users flock to the new modems to speed up Internet downloads. Market researcher VisionQuest estimates 56K devices will account for 76% of global modem sales this year and 95% next year.

56K modems with Rockwell's chips are expected to appear soon. 3Com shipped the first new 56K modems last week, starting at $159. It will offer an entry-level version by month's end at $99, a price point intended to drive volume.

3Com is using the modems to introduce new branding, packaging and advertising.

Having acquired modem leader U.S. Robotics last year, 3Com is branding its new product simply as the 3Com U.S. Robotics 56K Modem. 3Com is the master brand; U.S. Robotics is a modem sub-brand.

Studio Archetype and Foote, Cone & Belding, both San Francisco, worked on design and branding.


3Com last week began a one-month magazine, newspaper and Web ad blitz for the new modem. At the end of March, those ads will be replaced by ones from FCB that adopt a new corporatewide look.

3Com is considering adding TV, radio and outdoor in the future, Mr. Clemmons said.

Just as 3Com is shifting its modem marketing focus from x2 to 3Com, Rockwell is expected to move its focus from K45flex to Rockwell, said Sharon Hamilton, marketing communications director.

Rockwell will promote its brand in its own ads and in co-op programs with modem makers that use the chips.

"Rockwell will position the Rockwell modems as the safest choice out there for maximum compatibility," Ms. Hamilton said.

Leap Partnership, Santa Monica, Calif., is developing Rockwell's campaign.

Lucent, meanwhile, will continue to rely on co-op programs with modem marketers and Internet service providers to promote its modem technology to PC users.

Copyright February 1998, Crain Communications Inc.

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