Gross margin, however, will likely remain higher because this increase will pull subscribers away from low incremental margin DVD plans to the virtual 100% incremental margin streaming service.

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Expected incremental margin pressures over the next year or two.

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As a focused directory business, we also believe returns to scale and potential incremental operating margin remain significant.

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Benefiting from the surging wireless LAN (WLAN), 3G wireless and broadband markets, Anadigics has been gradually filling its fab to fuel its high incremental gross margin, adding a couple of percent to utilization each quarter.

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It is a huge margin to find in development and each incremental gain in performance tends to become more difficult as diminishing returns set in.

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We're going to need to turn over every stone and use every incremental tool that's going to help on the margin.

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