Monday, July 30, 2007
SiRF, as I have briefly hinted in a previous article, like many other companies finds itself at cross-roads now. It has been the leading GPS chip-set maker supplying to almost all the major GPS vendors. Most Garmins and Tom-Toms that we would pick from store-shelves have SiRF inside. This being said, I wish to make a bold statement: SiRF will find itself marginalized and out of business if it does not diversify into other wireless technologies or strive to have a tie-up with a cellular or WLAN provider.
First and foremost reason is the recent spate of interest that the wireless companies have shown in small GPS firms. BroadCom, after surfing the waves for a while, decided to pick Global-Locate for its GPS needs. I am sure that other companies like U-Nav are up for grabs. Watch out for Marvell or Free-scale, as they are likely to pounce on such companies too if they come cheap enough. This puts SiRF with around $2 billion of market cap in a weird situation: While most of these wireless companies prefer to buy cheap and then build on it using internal resources, SiRF is too big to be acquired.
Secondly, is this concept of grabbing the most silicon in a platform. The wireless companies, with their own solutions, are likely to be better positioned to be able to achieve this than SiRF. SiRF will have to eventually come up with its own "bundle" if it has to be attractive to platform vendors. It has indeed made some strides with DVB-H and also media capabilities with the acquisition of Centrality. But, that still is only a limited number of eggs in its basket. Snapdragon, for example, offers DVB-H, SMDB and Media-Flo all in a bundle for the vendor to be able to pick-and-choose based on the market.
Thirdly, it is the "keep the Bill of Materials (BoM) low" thought. Any algorithm is good only to the point of making economic sense. SiRF's path-breaking algorithms are no longer attractive at the form-factor and costs being discussed in the mobile world unless it can leverage its technological leadership in the GPS field to always stay ahead. It would have to give a cheap and good product while also keeping the time-to-market low for the OEM.
Some may argue that all is not bad for SiRF. After all, its GPS expertise extends beyond mobile applications. The form-factors dictate algorithmic limitations with mobile phones, a situation not true for other devices. This, they argue, implies that the mobile GPS services are unlikely to supplant the market for the traditional GPS devices. My point is that technology as a whole is gravitating to a single device that can do most functions, not necessarily in an optimal sense. As an end-user, I would rather buy a single device that can do GPS, perhaps blue-tooth while along with being a cell-phone rather than buy 2 or maybe 3 devices separately. Note that I am not talking about having Wi-Fi and other data-related technologies that could further the attractiveness of such a unified device.
So, in summary, I think that if SiRF is not able to make strides in the mobile world in terms of getting a major customer or by diversifying, it runs the risk of being marginalized. If the future is in cellular mobile communications, and each cellular company has its own GPS solution, then it is only a matter of time before the concerted research and development of mobile GPS devices fructifies and begins to displace traditional GPS devices.
Thursday, July 26, 2007
On one side, there is an increasing need for GPS on the cellular platform while on the other hand, the technologies in the unlicensed spectrum also are moving towards co-existence. And then, there is dual-mode cellular/WiFi cards. It does not take a veteran to see the future. The writing is fairly clear and the long-term survival of many companies, including the big names, is in their assimilation of this fact and of course, in their execution of their plans.
This being said, it is not easy to come up with such products. Though this would be a coup for any company's marketing department, pulling it off is an entirely different ball-game, at least from the engineering side. Each product comes with its own quirks and is burdened by a zillion tests set-forth by their respective standards bodies. All these standards bodies, till date have not given thought to co-existence. In other words, the tests are written with the assumption that there will be no impairments resulting from other devices in the vicinity or in the same chip. Now, we may argue that there would be enough head-room since the standards-based minimum requirements, especially in the cellular world are fairly low. But note that designers may eventually scrap the bottom of each one of these barrels in terms of getting performance. And then there is a point of diminishing returns beyond which the economics of putting advanced receivers for various technologies in a single chip/card may not be worthwhile as compared to having more basic and cheaper receivers for each of these technologies in separate devices with sufficient isolation.
Also, let us say that under these constraints, the minimum test-requirements are met for each standard, then the question is whether this would result in good user experience. After all, all these integrated features are most sought after in the smart-phones and other higher-segment phones. Users expect to get a better quality of service for the money they put in on these devices. Also, just passing the minimum requirements does not make the cellular carrier happy either since the capacity takes a hit.
As I have high-lighted above, the task of integrating various technologies is a tough challenge although the benefits are huge. It is clear that the company that can juggle all the parameters I mentioned, while understanding the magic mantra, both for the cellular carrier and the customer, would come out on top. The coming days will also give us a clearer notion of its feasibility, both from the technical and economic stand-points.
Thursday, July 19, 2007
BroadCom also scored another goal today in the game against QualComm. They have signed a licensing agreement with Verizon, who have agreed to pay $6 per EV-DO hand-set they sell with a maximum of $40 million per quarter. In return, Verizon have also agreed to drop all efforts to stall the ITC ban including the request for Presidential veto.
From Verizon's point of view, it comes as a relief since this would at least give them some quality phones to compete against Cingular and iPhone. They were hoping that QualComm would be able to resolve it with BroadCom, but that was not to be. From BroadCom's side too, it is a welcome development. They have, in some sense, done the service provider a favor and would now have some camaraderie with them for the future. This is doubly sweet for them as Verizon with its CDMA network shares a strong bond with QualComm. With Verizon giving up its part in the fight, this is definitely perceived as a blow for QualComm.
This being said, QualComm issued a brief statement 'welcoming' the move while avowing to continue their fight for a Presidential veto, of course without one of their primary allies. Also, clearly, the war will continue since there are other carriers in question.
And yes, don't be surprised if Sprint signs a deal tomorrow giving BroadCom more traction in the U.S. market. However, these deals are more of a make-shift arrangement and some business goodwill until a deal inked by QualComm and BroadCom.
BroadCom today announced its quarterly results. Though the revenue numbers were a tinge lower than that of last quarter and the corresponding numbers of last year, it was by and large a strong finish if one accounts for R&D and the acquisition. With things only looking up for them (of course barring the ex-CEO controversy), I am inclined to be bullish on them.
A quote from the CEO as sourced from their press release reads -
"In the midst of continued variability in the ordering patterns of a few of our larger customers, we are pleased to announce that revenue in the second quarter was in line with our guidance, ... Broadcom had another strong quarter of cash generated from operations and continued to put our cash to work aggressively, buying back shares and acquiring companies to help drive our future growth. We believe the increasing diversity of our customer base and end-market exposure -- along with significant new product momentum -- should enable Broadcom to increase revenue sequentially in the third quarter."
Note the emphasis on diversity of customer base and end-market exposure and new product momentum. As I had mentioned in a previous article on technology integration, BroadCom seems to be heading the right direction in terms of their focus. The efficiency of their plan execution, their product quality and their ability to successfully sell themselves are questions for the near future to answer.
Two pieces of information over the past two days may spell some more bad news to QualComm. First came in the news that the European Union has decided to go with DVB-H patronized by Nokia. The EU wants to stick by it and maybe even make it a law to only use DVB-H for broadcast. This means that QualComm's MediaFlo is virtually out of Europe. Of course, this is not all bad since MediaFlo has gelled well with the U.S. carriers. With this news, also watch out for Sirf Technology Inc. which through the acquisition of TrueSpan has positioned itself to expand beyond the GPS market to get into the DVB-H market as well. Though their market cap is around $1.5 billion now, with GPS taking center-stage as one of the big features of tomorrow's mobiles and with DVB-H gaining traction, the company can go places, especially if it can ink some prudent GPS bundling agreements with cellular and/or WLAN chip-vendors. Another thought, as outrageous as it may seem, is that QualComm may make a bid for Sirf just for the synergy and the complementary technology that the latter can bring in. Of course, this would be at least around 3x bigger than the Flaarion acquisition.
Another piece that is most talked about today is the Sprint-Clearwire agreement to merge their WiMax networks. This is good for the WiMax proponents but is most likely a set-back for QualComm. A good possibility however is that Sprint sees this as a way to de-couple it's WiMax business (which is currently only a small proportion) and its more pervasive CDMA business. If this merged-unit is being treated as a new independent entity, then Sprint is implying a commitment to keeping alive and hence enhancing its CDMA2000 network with EV-DO and other capabilities along the 3GPP2 evolution path.
A lot of the leading players in the industry have realized that their unique selling proposition (USP) may no longer lie in their original core competency area and have sought to accessorize themselves with other wireless technologies as well. More importantly, as the market matures, the margins available for the players are likely to fall drastically even if they have multiple technologies in their kitty. Thus is born a niche area: Integrated Wireless Solutions.
What do I mean by Integrated Wireless Solutions anyways? I am talking about the ability of the same wireless chip or card to support multiple technologies. Qualcomm's Snapdragon platform has 3G cellular capability along with GPS functionalities. Plans are on to incorporate WLAN and blue-tooth into this platform. The company is already pitching this as the ultimate dream-solution for any dream-phone. The idea is fairly clear, provide to the phone manufacturers, this all-in-all solution at a cost they cannot resist. This would result in a win-win situation with the chip-vendor also making more profit per unit sold, of course at the cost of other single technology providers who would consequently be marginalized.
The Qualcomm approach has been to have a cellular core around which all the other items can be added. Its nemesis, BroadCom, however has taken a top-down approach to get to the same place. Originally adept in WLAN, BroadCom has slowly expanded its portfolio to include bluetooth, added 3G with Zyray's acquisition, and most recently completed the set with the acquisition of Global Locate and its GPS solutions. Though BroadCom is behind perhaps in the design process, some careful planning can position it as a leading competitor to Qualcomm. Other WLAN majors have also pretty much taken BroadCom's approach but do not yet possess the complete capability to integrate.
What this means is that the other small and big semiconductor companies need to obtain access to these technologies, through internal development, acquisitions or through strong alliances.
Though I have briefly discussed integrated solutions in a fairly abstract form in this article, I intend to jot further ideas on effective strategies for different companies moving forward, the integration time-frame, logistics as time permits. Please also watch out for write-ups on the mobile GPS market, since the incorporation of Location-based services perhaps would be the most immediate of integration efforts to happen.
Saturday, July 14, 2007
So let me add one more company to the already long-list of suitors that I have put up in this forum. Welcome icera semiconductors!
It is almost as if the company gels with the Apple brand rightaway with the latter's trade-mark 'i'! Jokes apart, icera has been talking for a while about having the industry-best HSDPA solution. And now they claim that an independent industry evaluation has come up with the same conclusion. They are indicated to be better than QualComm's next generation MSM7200. What is more, their Livanto® wireless soft modem, as the name indicates is completely software-centric. This is again something that Apple will like since they can then potentially look at designing a universal solution which does not need a different base-band chip for different regions. And that is not all, they offer dual-mode 2G/3G capabilities currently making them a ripe candidate fo V2. Their claims about lower power consumption is also a great plus.
This being said, icera only offers a 3GPP solution. So Apple, if they want to enter the CDMA2000 evolution path, would currently have to look beyond icera, presumably QualComm. But nothing prevents icera, with a guarantee from Apple, to license the CDMA IP from QualComm and develop their own solution using the know-hows from their WCDMA development. The second draw-back of course is the lack of an integrated Wi-Fi and GPS chipset. Another fine-point is that the performance demonstrated is for a two-antenna solution while Apple V2 is likely to be a one-antenna solution. So after all, their best-performing modem may not be compatible with Apple's plans. Nonetheless, they seem to have the capabilities to switch to the other receiver which should serve the iPhone's purpose. Also, my point is that if the solution is feasible for Apple (I mention feasibility because I am not sure if icera will have the economy of scales to match the bigger bidders in the pricing wars), the latter is more likely to retain the flexibility of a software upgrade for other softwares while also obtaining cheap Wi-Fi and GPS licenses from either their existing customers or their cut-throat competitors.
It seems that icera has something unique to sell. They may be rightly positioned to supply base-band capabilities to a lot of the smart-phones of the future. Most notably, a contract from Apple can make this UK-based soft-radio company the next hot property in wireless.
Tuesday, July 10, 2007
I came across an interesting article at
where the author mentions that the future technologies may not live up to the promise of high-speed and that better user experience with iPhone V2 and 3G is only a myth. While I partially agree with arguments and that 3G won't be the panacea for all the user woes, there is some reason for the expectations.
My argument is two-folds. One is that while the GSM networks around are fairly well populated and leave little room for data speeds, the HS and other 3G networks currently rolled out are nowhere near capacity. In other words, as long as these networks are not dense, there is a possibility that the initial users (I can't give a time-frame though) are likely to get an enhanced user-experience with respect to speeds. I am implying that the infrastructure in place for 3G far exceeds the current usage and hitting the density of the GSM networks may take a while.
Secondly, the argument with WiMax, I suppose, is cheaper infrastructure costs. This means that more sectors/base-stations can be laid for the same cost thereby supporting more users/higher data-speeds for the same investment. This then can also mean higher data-speeds coming from the future generations.
This being said, I will definitely buy the author's argument when the sectors become capacity-limited or in other words when there are more users in the network than what it was designed for.
Sunday, July 8, 2007
The movie theatres are showing trailers of "Balls of Fury", a purported spoof championing an under-ground ping-pong tournament. Hey, there is a good ping-pong game happening above the surface too! And the entire wireless industry has its eyes glued to it.
I am talking about the QualComm-BroadCom war following the ITC ruling. For several weeks now, this drama has never failed to entertain with new press-releases from both players coming out on a regular basis. Amidst all this, there is a call for the President to referee this tug-of-war. While, there are a few weeks more for his 'crucial' decision, both QCOM and BRCM are providing their versions of the case-facts to facilitate his decision.
The latest was this press-release from BRCM -
The article seeks to explain the 'victimization' by QCOM and also the 'monopoly' in the CDMA market. It further presents the situation as stemming from QCOM's repeat offense and that their argument about emergency response is really a scare tactic trying to steer the issue away from being a mere business dealing that has to be ironed out. Though the article is biased for obvious reasons, it does bring out the sentiments of what most others think and believe QualComm is up to. The article also deliberately seeks to underplay the importance of the patent in question to justify the high royalty costs sought ($6 a piece). While there is a point citing that the percentage profit sought for this patent is much lower than the one QCOM sought for video compression, I do not see a justification for a power conservation patent demanding 2.5% of the unit cost. It should be noted in this context that QCOM charges about 5% royalty per chip-set for its entire suite of CDMA patents. Quite naturally, QCOM has rejected the offer citing a loss of $1.5-2 billion over 2 years. That would be a fortune for a single patent.
Of course, in a negotiation, the seller is likely to start high while the buyer tends to low-ball. Guess it is the bargaining norm. The question here pertains more to what these two will settle for. BRCM seems to be gunning more for a royalty-free cross-licensing which would now give them a much higher margin on each chip sold. QCOM, on the other hand, see this as a threat to their business model given that all of BRCM's profits come from their coffers.
So much for now. I shall get back on this topic as more information is available.
Tuesday, July 3, 2007
As analysts and technology enthusiasts rush to dissect the iPhone to unravel the 'closely-guarded' secrets of the chips inside, it does not come as a surprise to me. To most wireless insiders, putting two-and-two together should have been easy. In most of my blogs, I have been taking for granted that the Infineon GSM chip is inside. The other component chips were also fairly guessable based on public stance of some of these companies and general word-of-mouth.
So, though it comes as a confirmation to those dis-believers, its a fairly redundant one at that. To me what is interesting is the iPhone V2 going forward. That is where the guessing game should be. So, all the hoopla about shares of these chip-makers going up are ratifications of the truth, as I have pointed out in my previous articles, I would not be bullish about most of these companies based on what they have in there today.
For the uninitiated, Infineon's GSM chip, Marvell's Wi-Fi, Samsung's memory and BroadCom's controller chip are in the iPhone. Intel, TI and National also had a share of the pie.
Sunday, July 1, 2007
QualComm (QCOM) is on the other side of the spectrum. With its acquisition of Airgo, it now has GPS, WiFi and Bluetooth capabilities ready to be integrated with its mobile solution. I believe that's what it is touting its Snapdragon platform and its future HSPA chips: the one-stop shop for cellular chips. This is a very attractive proposition for Apple and with a QualComm chipset, the iPhone could be a killer. While the performance superiority may be established beyond doubt, there are other issues that dog this potential alliance. For one, there is the ITC ban on future QualComm chipsets. This means that unless the issue is settled with BroadCom, iPhone with QualComm may well be a non-starter especially with the time-scales for the 3G version. So, QualComm is very likely anxious to get the ban out of its way for more reasons than obvious, with iPhone being a prime motivation.
Another issue may be leverage. Both players are traditionally 'leverage-seekers'. While Apple would prefer to have a complete control on its phone design and obtain it at a cheap cost, QualComm will strive to obtain maximum leverage out of its single-chip solution and all the IP in the chip. Apple may sacrifice some performance for a degree of flexibility and better position in the race. To me, the thought of these two heavy-weights tying the knot and the dynamics that result in and from such a deal is almost indescribable though it can only mean good things to the paying customer. In fact, the more I think of it, the more problems I see. Just as any marriage, this one will have to be about compromises from both parties, and substantial ones at that. To start with, however, Apple will have an upper edge since it gets to choose.Also, strategically, it may be more important to QualComm that the iPhone comes through.
Talking of strategic importance, an iPhone deal may be a life-saver for others. Let us take BroadCom (BRCM) as our third candidate. It is on the other side of the ITC ban. Also, with its recent acquisition of Global Locate, it is claiming the industry-first capability to integrate mobile with WiFi, GPS, Bluetooth and also FM. So, if the modem performance can be proven to be competitive with respect to the QualComm chip and also relatively glitch-free on the inter-operability side etc., then it is quite possible that BroadCom may pull another one on QualComm. In such an eventuality, BroadCom may do great by accepting free cross-licensing from QualComm as part of the post-ITC ban deal. Though it is difficult to accurately predict what exactly cooking, a success here may give the long-ailing mobile program at BroadCom its much needed impetus and help the company get the coveted third spot in the suppliers list.
Marvell may emerge as a dark horse contender as well with its mobile, blue-tooth and Wi-Fi capability. GPS has the potential to hurt its chances but my guess is that there are partnership initiatives in place to address this weakness. It is also possible that it is eyeing an acquisition much along the lines of BroadCom's. A sore-point, however, for Marvell is that it has been mired in its own internal problems with stock-back-dating etc. With the powerful Weili Dai being relegated, the Marvell ship seems to have lost a good part of its rudder and has since been stuttering. The iPhone however may be seen as a medium to resurrect and rejuvenate the company. If a major design win gets through for the next version, the past mistakes may soon be forgotten.
And then there is the possibility that Apple will still take the separate chip approach, though it is not an ideal situation. For cost and leverage reasons, Apple may select this route letting various players to again compete for each of its features, perhaps for pairs of features. We may well see some if not all players mentioned here and perhaps others as well achieving design wins for v2.
We may never know officially what is in there, given Apple's propensity to keep a tight lid on things. But it is quite possible to guess. So either Apple will tell, or time will!
And so the story is, everyone who is a some-one in the 3G world wants a part of the iPhone pie. While this may be the desire, the eventuality may be too much for most vendors in this fragmented space to achieve. Very few have the capability to produce integrated chip-sets or even have the R&D budget to work on that and the power management aspects. These differentiators are likely to widen the rift between the top-of-the-line vendors and the others. For example, Agere that was acquired by LSI logic was working on a 3G chip. They will now have to work hard to get GPS and Wi-Fi capabilities, if they ever can. The situation is further accentuated by E911 being made mandatory. Realistically speaking, that leaves us with a few candidates at this stage unless something significant is in the cards for the next few months.
Infineon (IFX) deserves first mention since it already has a design win with Apple. Seemingly, it has a cheap solution which meets Apple's expectations on the power management-side. The next few days will further serve as testimony for the company. The customer satisfaction with the modem performance will either justify or put to death, Apple's confidence in Infineon. This being said, Infineon does not have a proven 3G solution on its own. However, Interdigital (IDCC) has a cross-licensing agreement with Infineon to be able to develop dual-mode chip-sets for GSM and WCDMA/HSDPA (but not extensively field-proven either). Interdigital, on its part may hope to use the iPhone and Infineon's relationship with Apple to wedge their way into V2. While, Infineon would gain licensing fees, a deal along these lines may auger very well for Interdigital. Long-known for the cut-throat IP litigations against Nokia and the other biggies, Interdigital seems to want to hit it big even in modem development. If it can strike a deal with Apple and also other smart-phone vendors, Interdigital may be on its way to getting a part, albeit a small one, of the cellular pie. After all, unless a transition happens it is very difficult for Interdigital to survive with the one-time IP license/litigation model. The biggest draw-back of the Infineon-Interdigital combination however is their lack of GPS or Wi-Fi capability. If Apple opts for either one of them, the iPhone will have to again seek separate designs for the Wi-Fi part, something to keep in mind given the power optimization and the other improvements sought moving forward.
In the next part, we will look at the other horses in this race