The suitors for iPhone V2 - Part 1

Sunday, July 1, 2007

While the wireless industry as such does not want to believe that a single phone is capable of changing its dynamics, none of them are willing to risk it by betting against Apple and iPhone. They argue that Motorola with its RAZR only bit dust running into losses and laying off 3500 employees world-wide. But then, on the other hand, they are not able to ignore the force of evidence: Steve Jobs has hard-balled his way into profit-sharing with Cingular, a hitherto unheard-of practice in the industry. If a carrier can come around to believing that the iPhone can change their world, the decision-makers at the chip-set companies are unlikely to risk being left behind.

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

Posted by Vijay Nagarajan at 12:19 AM  

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