U.S. Robotics Corp., the Chicago-area modem manufacturer that spun off from 3Com Corp. in September, set up shop in Irvine this week to focus on culling emerging products that the company hopes to sell under its name.
The Schaumburg, Ill., company is the No. 1-selling brand for external analog, or dial-up modems. But as that market slows with the flailing personal computer market and the advent of new technologies, U.S. Robotics is looking to the West Coast for entree into such cutting-edge arenas as wireless systems, Internet appliances and home and small-business networking products.
"Our future is definitely on the West Coast," said Van Andrews, chief executive of U.S. Robotics. "That's where the technologies are, and that's where the labor pool is."
The market for all analog modems is projected to grow from 84 million units shipped in 2000 to about 104.5 million units this year, according to Gartner Dataquest.
But sales of external modems--U.S. Robotics' bailiwick--have slowed dramatically. The worldwide market declined 39% to $950 million last year from $1.55 billion in 1999, according to research analyst Mike Paxton of Cahners In-Stat Group.
Paxton said U.S. Robotics brings a powerful brand name to its new mission.
"Just because they're an analog modem company, don't write them off," he said. "That's a significant market out there. Yes, it's shrinking, but there's still some money to be made."
According to Jupiter Research, analog modems are projected to account for more than 60% of the Internet access market in North America through 2005.
U.S. Robotics' new 7,000-square-foot facility, in Irvine near John Wayne Airport, will initially have five engineers and a marketing and business force of about 20. It will serve as the company's emerging businesses unit, which includes an additional team of 11 engineers based in Boulder, Colo.
U.S. Robotics, which had about $500 million in dial-up modem sales last year, began offering wireless networking products for homes and small businesses through major stores this year.
It also announced alliances with Broadcom Corp. of Irvine to develop broadband cable modems and home networking products that connect devices to one another within the home using existing phone lines.
The company says its first cable modem, made with Broadcom chips, will be on the market in the second quarter of the year. At the same time, it expects to launch a DSL modem in partnership with GlobeSpan Inc.
U.S. Robotics, established in 1976, was bought by 3Com in 1997. After being spun off again two years later, it is a privately held company with 250 people worldwide, half of whom are in the Chicago area.