Agere Systems (AGR)

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NEWS: Agere Lands in Cornice Storage Element for MP3 Player Market
By Jessica Davis -- Electronic News, 6/10/2004
http://www.reed-electronics.com/electronicnews/article/CA424456?spacedesc=news

Your next MP3 player may just have its roots at Agere Systems.

The Allentown, Pa.-based communications and storage chip company has recently won a deal with Cornice, maker of compact, high-capacity storage for use in its 2GByte Storage Element (SE).

Agere's TrueStore read-channel device, the RC6500LP chip, won the Cornice business because of its low power capabilities, according to John Harris Agere's strategic marketing manager for the family of chips.

"We exhibited a lower power consumption compared to what else is available on the market," he said. "It provided them with a good signal to noise ratio that let them bump up the capacity of their storage elements."

Rather than a drive, Cornice makes a basic storage device called a storage element. The device takes advantage of electronics that sit on the host side of the end device, using those electronics to perform some of the functions customarily found on a disk drive. This reduces the cost of their device.

"In consumer electronics, it's all about price points," said Dave Grace, a customer marketing manager at Agere. "You've got to hit the price point."

Cornice currently sells most of its devices into the market for MP3 players. According to the company, the 2GByte storage element, is one-inch and has the capacity to hold 40 CDs worth of MP3 music, three hours of VHS-quality MPEG digital video, 100 video games instead of one on a handheld player, or 180 four-megapixel very-high-quality digital camera images.

Cornice storage elements are currently embedded in consumer electronics products from Digitalway, iRiver, Petters Group/Soniqcast, Rio, and Thomson.

While not the most important element, price probably played a part in Cornice's use of the Agere device, Grace and Harris concede.

"The market for consumer electronics is very price elastic," said Harris. "The further down on that price curve you can go, the better your market gets. Consumer folks try to hit what they call the single spouse purchase price. That means I can go out and buy it and my wife won't yell at me when I come home."

But the most important factor, Agere believes, is the low power capabilities of its device.

"Cornice is selling into all battery powered devices," Harris said. "Anything you as supplier can do to reduce power consumption is advantageous. The device has a couple of low power modes you can put it into."

Going forward, Agere expects devices like its TrueStore and like Cornice's storage element to branch out from MP3 players into converged cell phone devices that include higher quality cameras, PDA functions, and even video and graphically dense games.

"Now you see flash based storage, but that technology has its limits," said Harris. "If you need a lot of capacity, rotating magnetic storage is a much better value in terms of dollars per gigabyte. Two gigs of flash is upward of $500 now and that's cost prohibitive. The kinds of applications we are talking about need much more than 2 gigs of storage."