Tuesday, February 26, 2008
We have so far looked at Broadcom’s Enterprise Networking business, Broadband Communications business, and the Bluetooth and WLAN components of its Mobile and Wireless Business. I will now look at its cellular mobile business which, in my mind, is the make-or-break component for the company.
The cellular space is Broadcom’s avenue for growth today considering that all its other businesses are mature. With these turning into flat, stable revenue streams, the move to challenge Qualcomm, TI and the others in the cellular IC market was a necessary gamble. Broadcom is approaching the mobile space rather aggressively. Just last year, it broke into the top-5 mobile merchant IC suppliers according to an iSuppli research report. It also announced a string of products including a single-chip 65 nm EDGE chip, a complete HSDPA reference design and its much publicized ‘3G-phone on a chip’. This single chip 3G-phone design, which Broadcom claims is a year ahead of competition, combines baseband and RF functionalities along with FM and multimedia processing capabilities and has been priced at $23 for early customers.
The company has also been involved in an extended legal battle with Qualcomm over intellectual property. From Broadcom’s standpoint, wins here will reduce the pricing advantage that Qualcomm has in the 3G business. Also, it helps project the company as the new champion in the mobile world. If we add the extensive PR campaign through the last two years, it is easy to appreciate the strides Broadcom has made in this space recently.
Broadcom also spent a substantial portion of last year’s revenues directed to this business. This includes its migration to 65 nm (the process technology employed by leading IC vendors in the mobile space) and its purchase of Global Locate for GPS capabilities. Both these are seen as imperatives for the company to stay amongst the top vendors each of whom have a complete portfolio of wireless products to complement their mobile chipset solutions. With these moves and the product announcements, Broadcom is targeting 10% market share by the end of 2009.
While the product and marketing strategy cannot be faulted, it now boils down to execution. In the sequels, I will take a brief look at what this means and also on the expected revenue growth from this division.
Disclaimer: These are my perspectives on Broadcom and does not necessarily reflect the views of Atheros Communications or Tensorcomm.