Terayon

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Terayon Communication Systems

Type	Public (NASDAQ: TERN)
Founded	Santa Clara, California
Headquarters	Santa Clara, California, USA
Industry	Video, voice, and data solutions
Website	www.terayon.com

Terayon Communication Systems, Inc. engages in the development, marketing, and sale of equipment to broadband service providers for delivering broadband voice, digital video solutions (DVS), and data services to residential and business subscribers worldwide. Its DVS products include CherryPicker line of digital video processing systems that enable cable, telecom, and satellite operators in managing their digital video content, including the rate shaping of video content to maximize the bandwidth for short definition and high definition (HD) programming, grooming customized channel line-ups, carrying ads for local advertisers, and branding themselves by inserting their corporate logos into their programming. The company’s home access solutions include cable modems, embedded multimedia terminal adapters, and home networking devices. Its products enable broadband service providers to deliver voice, video, and data services to residential and business subscribers. The company sells its product primarily to broadband providers, including cable operators, television broadcasters, telecom carriers, and satellite providers.

Terayon was founded in 1993 to provide cable operators with a cable data system enabling them to offer telephone-over-cable and high-speed, broadband Internet access to their subscribers. By 1999, Terayon was primarily selling this cable data system — composed of cable modems and cable modem termination systems (CMTS) — which utilized Terayon’s proprietary Synchronous Code Division Multiple Access (S-CDMA) technology. At this point, Terayon initiated an acquisition strategy to expand its product offerings within the cable industry and outside of the cable industry to the telecom and satellite industries.

With the market downturn in 2000, Terayon refocused its business to target the cable industry and began selling data and voice products based on industry standard specifications, particularly the Data Over Cable System Interface Specification (DOCSIS), thereby beginning its transition from proprietary-based products to standards-based products, and our digital video solutions (DVS) products to cable operators and satellite providers. Terayon’s S-CDMA was incorporated into DOCSIS 2.0 to increase bandwidth and robustness. To this day, Terayon sold millions of standards-based cable modems.

In 2004, Terayon refocused its business and made DVS the center of its strategic direction. In particular, Terayon has expanded its focus beyond cable operators to more aggressively pursue opportunities for its DVS products with television broadcasters, telecom carriers and satellite television providers. Additionally, as part of this decision, Terayon also determined that it would phase out equipment for home access solutions (HAS), including cable modems, embedded multimedia terminal adapters (eMTA) and home networking devices, and ceased future investment in its CMTS product line. This decision was based on weak sales of the CMTS products, anticipated extensive R&D investment required to support the product line and the very low margins on the cable modems.