The Lessons US Robotics Can Teach Us

US Robotics rise in the modem market during the 1990′s provides an interesting case study in the benefits of building your product around a programmable technology.  At the time of the company’s founding the major modem providers developed custom chips to perform the signal processing required in the latest version of the ITU modem standard.  The standard changed periodically to increase the baud rate as new signal processing algorithms were developed.  Changes to the standard kicked off a race to deliver new custom chips to accommodate the changes.  This was an expensive and time consuming process.

The folks at US Robotics took a different road.  They built their modem around a relatively inexpensive DSP chip from Texas Instruments.   They programmed the modem algorithm in firmware.  This freed them from the costs of developing, testing,  and stocking custom modem chips and allowed them to quickly respond to changes in the modem standard. It proved to be a brilliant idea.

By the mid 1990′s it was commonly expected that US Robotics would be first to market each time the modem standard changed.  Being first to market with a new higher speed modem was a huge advantage because everyone wanted higher speed.

Because they used a programmable technology in their product US Robotics could offer their customers a firmware upgrade to the higher speed as opposed to swapping out hardware.  This proved to be very important to their largest customer AOL.  AOL bought modems by the truck-load and spread them all over the US so customers could dial-in to their service.  To AOL changing hardware was a logistical nightmare but changing a programming file was relatively easy.  US Robotics assured AOL there would be no wholesale hardware replacement when the standard changed and they locked in the business.   Being first to market and having the longest time in the market are significant business advantages.  US Robotics exploited these advantages brilliantly.

Today we have FPGA-based soft systems on a chip that provide businesses these same advantages.  What’s even better is that they offer the advantage of changing hardware by re-programming the chip.  Hardware has become softer.  Standards still change, customer requirements change, and engineers still create bugs.  Basing your product on a soft system is the best way to deal with the inevitable changes that will arise and gain a strategic business advantage.