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Philips jumps into modem market

The electronics powerhouse is going up against Hayes and U.S. Robotics with a new 56-kbps fax modem.

Electronics powerhouse Philips Electronics has decided to try its luck in the American modem market with a new 56-kbps fax modem for home users.

Due by the end of the month, the new modem will be Philips' first foray into the retail modem market, which is currently dominated by 3Com's (COMS) U.S. Robotics brand and Hayes Microcomputer.

"We intend to be a major, active player in the modem market," said a Philips spokesperson.

But the company isn't likely to be an overnight sensation.

The competition in the retail modem market is fierce, fierce enough to recently drive several companies into mergers. Hayes Microcomputer announced its intention to buy Cardinal Technologies in March. Even U.S. Robotics, which has the best financial standing of all the modem makers because of its dominant marketshare, was recently acquired by 3Com.

Hayes and U.S. Robotics have also begun to branch out into other communications products, such as cable modems and ADSL (Asymmetric Digital Subscriber Line) modems to find more profitable niches.

Philips is no lightweight, however. It is a $41 billion worldwide conglomerate and can afford to buy some marketshare in the retail modem market.

Philips says it will compete by offering an easy-to-use modem bundled with high-quality communications software. The EasyConnect 56K modem is based on the K56flex networking protocol from Rockwell and Lucent. If a different industry-wide standard emerges, however, the modem can be modified to match via a software upgrade.

Buyers have to make sure their Internet service provider can work with modems based on the K56flex protocol to get the higher connection speed. Otherwise, modems will default to 33.6-kbps.

The modem can also work as a speakerphone and answering machine, complete with multiple voicemail boxes, remote voicemail access, automatic paging, and caller ID. The modem also comes with a special port for connecting a color desktop camera from Philips for videophone communications.

An internal version of the modem for Windows PCs will cost $119 for a limited time. After a 60-day period, the price will go up to $149. An external version is also due later this month, but the company hasn't set a price.