MaxGate on Monday plans to announce a new family of DSL (digital subscriber line) modems for businesses. The 1-year-old company makes routers that allow businesses with broadband access to link their PCs together to the Internet.
With the move, MaxGate will enter a market that large equipment makers Alcatel and 3Com recently exited. In early June, Alcatel sold its DSL modem business to Thomson Multimedia in a stock deal worth $389 million, while 3Com discontinued its DSL and cable modem business.
Analysts say DSL modems have become a low-profit business because of heavy price competition on the modems, bankruptcies of DSL service providers, a slow installation process for service, and rising DSL rates.
Nevertheless, MaxGate executives say they believe they can be profitable in their new endeavor. The company is bundling networking features into its DSL modem, so businesses can link PCs to the Net with the product. MaxGate is negotiating with carriers and service providers to sell the modem to businesses.
"It is a commodity product. And you can see the price (for DSL modems) has dropped dramatically," said Janus Hao, MaxGate's product marketing director. "But if we can ship enough mass quantities, we will make a profit on it."
MaxGate's family of NetJet modems is available immediately, Hao said.