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Well-Funded Chip Startup Goes After TV on Phones, Handhelds

As a dad of four teens, Mohy Abdelgany knows the power of entertainment on the go. He’s betting on it as chief executive of Lake Forest’s Newport Media Inc.

In less than two years, the designer of chips for watching TV on phones and other handheld devices has raised $66 million in venture funding, developed products and opened a design center in Egypt.

“The mobile TV market is quite fragmented,” Abdelgany said. “There are four or five standards in play. Having a startup trying to attack four different standards is a huge task.”

Abdelgany’s background includes stints at Woburn, Mass.-based Skyworks Solutions Inc.’s Irvine operation and at Newport Beach-based Conexant Sys-tems Inc.

He said he’s betting on the evolution of wireless phones. Nearly half of all phones sold have some kind of added feature, be it Web browsing, a navigation device or a digital music player, he said.

“There’s a market and demographic that’s quite interested in having more interesting applications added to their cell phones,” he said. “I want 20% (of that market). That’s my hope and expectation.”

Markets in Asia have warmed to mobile TV. Europe is a mixed bag. After initial interest, the number of subscribers there has fallen.

A study by Seattle-based M:Metrics said former subscribers in Europe outnumber current subscribers by nearly 20%. Poor picture quality, unreliability and high costs most often were cited for canceled subscriptions.

Projections in the U.S. aren’t stellar.

M:Metrics’s survey shows about 10% of 31,455 respondents are likely to subscribe, download and watch mobile TV.

Even among men 18 to 24,the group most closely linked with mobile TV,barely 20% said they would be likely to use the service.

Qualcomm Inc., AT & T; Inc. and Verizon Communications Inc. all have plans for carrying broadcast TV over portable devices in the U.S.

Last week, Verizon started offering mobile TV in 20 cities.

“The wireless industry really believes in mobile video, but it’s going to be interesting to see what the uses are, whether you get a high quality product,” said Allyn Hall, an analyst with Scottsdale-based market researcher InStat.

The market for mobile TV could grow to more than 80 million devices annually by 2010, according to InStat.

But, Hall added, “My phone is capable of a whole lot of things I never use. There are an awful lot of camera phones out there. When’s the last time you used yours?”

Quality will likely dictate how successful mobile TV is in the U.S., Hall said.

“It may be one of those fads that gets a lot of attention but never takes off,” Hall said.

Quality is key, Abdelgany said. It will dictate how successful mobile TV is in the U.S. He said he’s convinced the idea will fly.

Investors seem confident, too.

Last fall, Newport Media raised $30 million in a third round of funding, which Abdelgany expects to be the last for the company. He projects revenue in the second half of the year.

The company recently came out with a mobile TV receiver chip that it says uses less power than others already out. Much of the cash is being spent on research and development so that the company’s chips can produce high-quality images on mobile devices, he said.

Last month, Newport Media opened a design center in Cairo, adding 20 engineers to its current pool of 55.

Abdelgany got his engineering degrees in Egypt.

“We’re trying to look into adding more engineering talent to our organization, especially in software,” Abdelgany said. “We have managed to recruit some key engineers. If you pick the top 1% of talent over there and anchor them with some Western experience and engineers, you have a good mix.”

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