PortalPlayer designs software and a chipset called Tango for next-generation entertainment products, such as streaming audio receivers, portable digital music devices and other non-PC systems.
PortalPlayer is poised to go after the smartphone market as handset makers look for storage solutions for MP3 files downloaded over third-generation high-speed data links.
Sharp Focus
"We kept a sharp focus on providing a complete platform solution throughout the most severe boom-and-bust cycle ever experienced in the technology industry," said John Mallard, president and CEO of PortalPlayer. "The company is now shipping technology platforms for hard-disk-equipped jukeboxes and is ideally positioned to capture market share in this very hot product category."
Indeed, VC funding has been responsible for PortalPlayer's growth in difficult market conditions. The Santa Clara, California-based company was founded in May 1999. It now has 170 employees and operates additional offices in Seattle, Washington; Hyderabad, India; and Charlotte, North Carolina.
Digital Darling
How is PortalPlayer attracting VC big bucks while other technology companies are struggling to survive? Foresight is the key, according to Aberdeen Group research director Russ Craig.
"PortalPlayer realized early on that the whole digital music, MP3-based market was going to be quite sizeable, and they took the position that they were going to provide a platform," Craig told the E-Commerce Times. "They have built a single chip implementation of a device that will allow you to both play back and to record MP3 files."
More importantly, PortalPlayer has created a reference design and is teaming with companies that have complementary technologies. For example, PortalPlayer has inked a deal with Macstore that allows companies to produce MP3 jukeboxes that do not require a PC.
"These guys are so hot," said Craig. "This is the right way to go after this market. They have a much more cost-effective approach with the PC-free system, and it's a very low power consumption device, which means it hits the sweet spot of the market today."
Digital Rights Management
PortalPlayer is also attractive because it has branched out beyond semiconductors to secure a complete play. The company boasts software licenses from Microsoft and digital-rights management software embedded into the platform, making the company a "good guy" in the eyes of content providers.
"These guys essentially have the technology that gets around all of the lawsuits from the content people through the digital rights management software," said Craig. "PortalPlayer is the white hat, and it doesn't surprise me at all that they were able to raise this money."
The company is also ripe to go after the smartphone market, according to Craig, as handset makers look for storage solutions for MP3 files downloaded over 2.5G or 3G (third generation) high-speed data links.
Spending the Money
PortalPlayer said it plans to use the new funding to expand worldwide business development, marketing and sales activity, and to continue investment in products and platforms for its original equipment manufacturer (OEM) and original device manufacturer (ODM) customers.
The company reportedly is gearing up for an initial public offering. PortalPlayer executives were not immediately available for comment.
