S3 relaunches: New name, new focus

S3 is changing its name to Sonicblue and its focus from graphics chips to consumer electronics - specifically Internet appliances

S3 has been making moves to realign itself as a digital-media and information appliance company in recent months. On Wednesday, the company made it official -- capping the news with a company name change to Sonicblue.

"In the past, the S3 name has been associated with graphics chips. That business is a commodity business now. It's very mature and the evolution of technology has slowed down," said Janet Leising, general manager of Sonicblue's frontpath division. "Now we are focusing on what the future brings."

Gartner analyst PJ McNealy, while agreeing with that assessment, said Sonicblue will still face challenges as it aims to tackle nascent markets.

"Compared to ten years ago, I would agree that graphics and multimedia have become a commodity business, because they are now considered a staple of any media platform," he said. "And Internet appliances and MP3 players have a big upside, but both face similar challenges."

These challenges include price and the education of consumers as to the value of Net appliances and MP3 players.

Sonicblue is in the process of closing the sale of its graphics-chip business to Taiwan-based VIA Technologies. The $323m deal is expected to close by 3 January.

S3 stood for "sight, sound, and speed", while Leising termed the Sonicblue name an "empty vessel", to be filled with new products.

In recent months, the company has been in the process of focusing on digital media and information appliances. It recently spun off its Internet appliance division, frontpath, while still containing a controlling interest -- and it has been pushing MP3 player products under the Rio name with new portable players and a receiver.

The line of home-networking products and modems under the HomeFree moniker will also remain a part of Sonicblue.

Last month, the company entered the fiercely competitive handheld market with its Diamond Mako PDA. The device is a repackaged Psion Revo Plus.

The Diamond Mako has not sold well in the United States, but it has fared better in Europe. Sonicblue officials are hoping that with improved marketing and distribution channels, the device will sell better domestically.

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