Marvell - WLAN market

Saturday, April 19, 2008

[Originally for Sramana Mitra]

So far in the Marvell series, we have looked at the storage and Ethernet business areas. We also briefly touched upon the overall company strategy. As we move on to dissect the company’s wireless business, we will start with its position in the WLAN market.

Marvell has a good presence in the WLAN market buoyed by the success of its low-power embedded solutions. These products primarily targeting the mobile segment have enabled Marvell’s penetration in the gaming devices and music player markets. Marvell is in Microsoft products, RIMM phones and in the iPhone, of course. Unless Broadcom can steer Apple towards its WLAN/Bluetooth/FM product, perhaps together with a bundled GPS chip as well, Marvell will continue to be in the rumored 3G iPhone. You can read the rest of my iPhone 3G analysis here.

Marvell does not, however, have as big a presence in the PC segment dominated by Broadcom and Atheros. The company is looking to change this situation with its Top DogTM product that is advertised to give throughputs up to 600 Mbps. Though it is presumably targeting the high-end laptop market with this product, Marvell also claims traction and design wins in the enterprise and retail access point markets. The company has 10-12% of the WLAN market share today. Most of this comes from the high-growth cellular and mobile consumer electronics product segments. I estimate that the WLAN business, that has grown around 20% y-o-y recently, contributed about 10% of the company’s fiscal 2008 revenues.

WLAN as an enabling technology will grow at about 15% CAGR for the next few years. So, Marvell’s ambitions of retaining its current growth in WLAN depend on its ability to retain and grow its market share. This, in turn, will depend on four things.

Firstly, the company’s 11n strategy of going for performance vis-à-vis price should pay off. The incumbents, Atheros and Broadcom, have very competitively priced products and in my mind understand the price-performance trade-off much better than Marvell. Then, you have relative newcomers Ralink coming up with low-cost solutions.

Secondly, even in the embedded space, its sustenance is in question with Atheros coming up with equal or better products both in terms of throughput and power consumption.

Thirdly, of course, is its ability to get design wins for its cellular platforms so the connectivity solutions can be bundled with the baseband chips.

The final factor is its ability to keep pace with the changing demands from both the PC and mobile customers. The Bluetooth, WLAN and FM single chip, for example, is almost imperative for the company to stay ahead of its competitors in the embedded space. The concept is great, but it also demands an equally good execution. The company claims positive traction for this product with product ramps in the second half of fiscal 09. I am anxious to see how this will play out for the next two years.

In summary, it appears that Marvell has betted on some of its new product strategies to sustain its growth. With the competition getting tougher, the company may find it difficult to maintain status quo here. But it has a good presence in the cell-phone and mobile consumer electronics segments. It also has a great track record of delivering on its growth so far. So, if the company executes on its WLAN product roadmap, I am willing to conclude that the company will still be able to achieve about 20-22% growth y-o-y from that business.

Posted by Vijay Nagarajan at 7:00 AM  

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