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Sub-$200 set-top boxes en route

A new reference design will mean Internet set-top boxes for under $200, not to mention increased competition in a still-limited market.

Zilog (ZLG), which supplies semiconductor products to the television industry, and PlanetWeb, a software company, today unveiled a reference design that will allow manufacturers to build an Internet set-top box with a retail price of less than $200.

As previously reported by CNET's NEWS.COM, the new design could heat up competition in the still-limited market for devices like the WebTV. Last week, Curtis Mathes (CRTM) introduced its own Internet access box that will retail for around $399.

Sony (SNE) and Philips (PHG), which manufacture and sell the WebTV set-top boxes, have reduced their prices to as low as $250, in part due to sluggish sales.

With more players pursuing a limited market, Zilog and PlanetWeb may be in for a rough ride, but they could earn an edge with their promise that OEMs (original equipment manufacturers) can sell the box for $200. Companies have not yet sold an Internet access device at a price point many analysts believe is critical for gaining the interest of the mass market.

Still, Forrester Research predicts that WebTV-like boxes, Internet-connected screen phones, and other such Net "appliances" won't be in 1 million U.S. households until the year 2000 because there isn't enough content designed for these devices.

Zilog and PlanetWeb seem unfazed by such talk. Their device will combine Zilog's hardware design with a Web browser from PlanetWeb to provide Internet and email access. Access will be available through virtually any Internet service provider (ISP), deflecting a criticism of the Sony and Phillips WebTV box, which must be hooked up to WebTV's access service.

The companies say sample Net access devices will be available in the third quarter of 1997. No manufacturing partners were announced.