Chatting to Entropic at IBC, we put what we thought was one of its greatest challenges in front of it, the fact that there are trials going on at DirecTV in the US, which do not use MoCA for whole home DVR communication, but use WiFi.
The rumors at IBC were that a new trial WiFi only Gateway was doing so well that MoCA would be dropped from the spec. We put that to Al Servati, VP of marketing at Entropic, which until it acquired Trident Microsystems set top division in 2012, only really made MoCA chips and looked for applications for them.
“The DirecTV device will still need MoCA, because some people prefer it and have already laid the wires,” he said.
But what Servati wanted to talk about was version 2.0 of the company’s
Channel Stacking Switch and it was showing a product using it at IBC in conjunction with Luxembourg based partner Inverto Digital Labs. It had previously said it would explore hybrid CSS switches with the UK based
Global Invacom Group.
What we never realized is that the Channel Stacking Switch actually contains a full band capture technology, so that it can deliver DTH acquired signals and push up to 32 separate HD TV channels down from the rooftop dish antenna to the home gateway.
“That’s why MoCA chips are still needed in DTH installations,” said Servati. So even if the distribution throughout the home is not MoCA, it still comes down from the antenna that way and even Faultline is not going to pretend that WiFi can carry 32 HD TV channels through a roof, so we see his point.
We remind Servati that the “full band capture” name is registered to Broadcom, and he said,” After we’d shipped millions of chips, Broadcom finally found a way to do the same thing and then went and registered it as a trade mark. It doesn’t mean Broadcom invested it first. And anyway ours is with just 1.7 Watts of power, while most other systems need more like 4 or 5 Watts.”
We still stick by our idea that if major players like AT&T and DirecTV, use more and more WiFi they will use less MoCA, but we accept that perhaps they will still use some. We know that AT&T has entrusted video distribution around the home to Quantenna chips, and really has yet to look seriously at a replacement for the wired HPNA technology that AT&T used in its last generation U-Verse gateways.
So that still raises an issue for the future of the company and almost as if by magic, a day after we spoke to Servati, Entropic decided to declare that it was “evaluating strategic alternatives,” which includes potentially looking for a buyer.
Entropic only recorded revenues of $50 million last quarter and said it expects them to go to lower to $43 million in the third quarter. In the second quarter last year it did $70 million in revenues.
The company still has a healthy bank balance with $85 million in cash and securities, compared to $88 million 6 months ago. But if revenues fall much further it will start to burn cash more rapidly. Despite the cash and securities balances holding up, Entropic used $20.9 million of cash in operations in running the business last quarter and it recorded a loss of $21.8 million last quarter, which is not as bad as this time last year, but the cash element is worrying.
A statement in the middle of September said, “Our Board of Directors and management are committed to taking the appropriate steps to enhance value for Entropic shareholders and we have determined that undertaking a thorough and deliberative evaluation of strategic alternatives, with the assistance of financial advisors, is in the best interests of the Company and all of our shareholders.”
Servati insisted that MoCA will continue to be used at most US networks and that the strategy of using it as the backbone for WiFi, using the P1905 standard to move data between the two networks would grow. He pointed to the success that companies like Actiontec have had with such products.