Monday, February 25, 2008
Broadcom series continues on Sramana Mitra's site.
In the last article, I talked about Broadcom’s Bluetooth business and its co-dependent relationship with Wireless Local Area Network (WLAN). In this article, I will take a deeper look at the WLAN market and Broadcom’s position in it.
Broadcom is a leader in the WLAN market as well with around 25% of the market share. In 2007, WLAN accounted for around $500 million in revenue for the company due to the penetration in notebooks/laptops, and the strength of its 802.11g line of products. Broadcom’s WLAN devices are found in non-Centrino laptops, gadgets like Nintendo Wii and various wireless access points found in your local Fry’s store.
The total addressable market (TAM) for WLAN is expected to double to $4 billion in the year 2012. This growth will be driven by a variety of factors. Firstly, the migration to the faster data-rate 802.11n standard will enable more wireless applications and networking. Secondly, the convergence devices movement will result in a steady increase in WLAN-enabled handheld devices, growing to over 20% penetration. Thirdly, portable consumer electronics devices will also offer WLAN as a value-add. This in turn will be driven by the rapid adoption of WLAN in Portable Media Players. Microsoft Zune and Apple iPod Touch are good examples of where the industry is headed. Similarly, WLAN will have a 100% penetration in the gaming devices market. Fourthly, stationary consumer electronics gadgets like printers are increasingly becoming wireless. Finally, the current market for Access Points, Routers etc. will also grow in strength with the increasing number of applications.
The WLAN market is fairly mature and so the leaders will retain their shares in the future. With mobile devices being important growth drivers, the key to sustained leadership will be integration, smaller form-factor and lower power. Broadcom is working on integrated products. It is leveraging its 65 nm migration towards smaller form factor (though this relationship is not straightforward). Its combined Bluetooth, WLAN and FM chip, if found hassle-free, is a sure winner. However, I am not as confident about its push towards low power. As I mentioned in my previous article, Marvell and Atheros are way ahead in terms of low-power designs. As a result, the company may not be able to exploit the penetration of cellular and portable devices optimally. This situation is accentuated by the flux surrounding the company’s cellular mobile business.
Overall, the WLAN business is yet another strong revenue stream for Broadcom. It will grow to yield a billion dollars in revenue for the company early next decade growing at a CAGR of 15%.
Disclaimer: These are my perspectives on Broadcom and does not necessarily reflect the views of Atheros Communications or Tensorcomm.