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ST takes stake in 8x8 in exchange for VoIP, DSP core license
By Mark Hachman, EBN
January 24, 2000 (9:31 p.m. EST)
URL: http://www.eetimes.com/story/OEG20000124S0067
ST Microelectronics Inc. today said it has invested about $27.8 million in stock in 8x8 Inc., a struggling vendor that bet most of its future on consumer videoconferencing. Under the terms of the agreement, ST, based in St. Genis-Pouilly, France, agreed to purchase 3.7 million shares of 8x8 stock at $7.50 a share, giving ST about a 16% stake in 8x8. In return, ST will receive a non-exclusive license to 8x8's voice-over-IP software and its next-generation VP7 DSP core. 8x8, Santa Clara, Calif., will use the funding to continue product development. Once a pure-play chip house, 8x8 invested heavily in the late 1990s to adapt its technology to two internally-developed end-user products, a television-based videoconferencing system and a similar, more expensive handheld device. The problem, explained an 8X8 spokesman, was cost-reducing the products for the consumer market. "We were really not a high-volume manufacturer," he said. "We were squeezin g pennies out of the design. At $300 a unit, we sold 150,000 units last year. We really needed to be doing that per month." The company ended up writing down the entire inventory, selling the units for between $120 to $150 when the boxes cost $180 to manufacture. Now, 8x8 is attempting to develop a voice-over-IP system for the enterprise market. ST, meanwhile, will integrate 8x8's technology into its DOCSIS cable modem front ends, giving the company a quick entry into the voice-over-IP market. ST will also integrate 8x8's VP7, a 128-bit, VLIW, 5 to 6-gigaoperations per second core that will be designed into a completed ASIC in 9 to 12 months, the 8x8 spokesman said. ST was not immediately available for comment.