The suitors for iPhone V2 - Part 2

Sunday, July 1, 2007

In the first part of this article, we discussed Infineon (IFX) and its partner, Interdigital(IDCC). Let us proceed to check on the bigger competitors.

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!

Posted by Vijay Nagarajan at 12:24 AM  

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