ST Microelectronics - NXP JV
Sunday, May 25, 2008
[Originally for Sramana Mitra's site]
In the last part of this series, we looked at STM’s strategic initiatives that are aimed at making the company more nimble and profitable. A very important part of this strategy was unveiled last month when the company decided to form a Joint venture with its wireless business and that of NXP. Before moving on to STM’s wireless business and outlook, it is important to understand the dynamics behind this move.
As per the deal, STM will have control on the JV with about 80% stake. The company will pay NXP $1.55bn to close the deal in the third quarter. With revenue totaling about $3bn in 2007, the JV had about 10 percent of the global market, according to iSuppli. Besides, the synergies are expected to save up to $250mn in 2011.
While STM has steadily encroached into TI’s market share by denting its Nokia and EMP 3G accounts, NXP is a 2/2.5G supplier to tier-1 and tier-2 vendors including Samsung. Besides the scale, the JV will have a strong IP position with over 3500 patent families. This, in turn, gives it greater negotiating power in IP cross-licensing discussions further increasing its margins.
Besides establishing a strong R&D team focusing on media convergence and energy management, the JV now has a complete portfolio of connectivity solutions. These technologies – WiFi, Bluetooth, FM and GPS - will be integral to tomorrow’s convergence devices. These connectivity solutions complement the company’s baseband, application processor and RF products, allowing the company to offer them as part of a state-of-the-art single stop mobile platform. For more details on the STM-NXP JV and its effects on the wireless industry, I will direct the interested reader to my articles here and here.
The wireless industry, especially the 3G chip vendor space, will consolidate and the stronger players will pick themselves out of the crowd. The JV is STM’s statement of arrival. Over the last couple of years it has made tremendous strides culminating in design wins from Nokia and Sony Ericsson. The JV will perhaps not make an immediate impact in its product line. It, however, expands its customer base and also positions STM to exploit the convergence market over the next few years.
Read the full article>>Nuviphone - Not yet new iPhone!
Monday, February 4, 2008
I have always liked the idea of combining GPS and a mobile phone. You can read my earlier articles back in July last year on integration where I mention that GPS will be a staple in tomorrow's phones. It was only a matter of time before someone came up with mobile GPS, that was a mobile phone and PND simultaneously. It is hence heartening to note that the GPS leader has taken the step forward rather than wait for the handset vendors to eat into its market and kill it.
Apart from GPS and a HSDPA modem (3G data standard), the nuviphone is advertised to have WiFi, bluetooth, video camera, digital camera and mp3 playback facilities. The details of these features are hazy at the moment. It however seems that Garmin has attempted to market its latest offering as a step beyond the iPhone.
While the phone looks GREAT on paper, I must say that it now boils down to execution. The big question is whether it can match the user experience that is the key selling point of Apple’s offerings. The levels of integration being promised are certainly a novelty. But these features can fall flat if the device is difficult to use. Besides, the OS should be capable of handling various applications that can make use of its 3.5 inch screen display and its touch screen. To be fair to Garmin, the intuitive UI of its PND products is proof that the company has the potential to live up to the hype that this announcement has created.
I am also curious to know several other details which the coming days will tell us. Does the phone have a flash drive or the likes? How many songs can we store? What is the resolution of the camera? How well is the OS integrated with the web? How about its WiFi capabilities?
I will certainly watch out for more announcements about the nuviphone and gather more details on existing Garmin’s existing products to have a better idea of what to expect from the phone. For the moment, I am quite ecstatic about Garmin’s move. It bodes well for the company and the mobile industry. If the nuviphone does live up to its billing, it already has one iPhone proponent ready to make a switch!
Gobi and QCOM's future
Wednesday, October 24, 2007
As I have highlighted elsewhere, I have reasons to believe that if QCOM does not mend relationships with the handset vendors, it risks being marginalized on the chipset market share despite stellar products. And more than anyone else, the executives at QCOM are aware of this. There are two paths and the company will attempt one or both -
- re-inventing itself as it diversifies into new markets and product lines
- making handset vendors happy by reducing royalty rates 'somewhat' in return for a higher chipset market share.
And let me re-iterate: QCOM will diversify and the PC/Laptop/Notebook market is lucrative. It will attempt to capture more of the silicon in this space. Based on the direction of all the lawsuits and licensing discussions, I expect it to internally shift some focus to other segments so it can compensate for any lost margins due to licensing fee reductions. Watch out for any announcements pertaining to integrated WiFi products coming from its Airgo acquisition.
It has an uphill battle though, because it has to establish credibility in such new markets amidst potential mudslinging. But given history and its technical leadership, I would not be surprised if it easily does that provided there is some tempering of its characteristic aggression.
iPod - I am Touched
Sunday, September 9, 2007
The 'Yes' list
- The touch-screen that was the iPhone's identity
- Wi-Fi, allowing internet access through the 'Safari' browser with custom yahoo and google functions.
- Music download from Wi-Fi hotspots at Starbucks locations
- Digital Radio
- Flash drives of 8 or 16 GB
The 'No' list
- Of course, the phone part of iPhone
- A microphone
- Bluetooth
- A bigger hard-disk
The Analysis
- Wi-Fi had to come: The iPod has to compete with Zune features and allow for wireless download of music
- Flash Drive, the power saver: The flash drivehas been used to compensate for the power-hogging Wi-Fi feature. The 'Touch' advertises 22 hours of music playback or 5 hours of video playback. Makes sense!
- Wi-Fi browsing: The Safari browsing experience is likely to be a paid service. If so, then the primary use will be limited to the business population and the intended reach of the device will not be as fast. On the other hand, the easy-to-use interface along with the mobility may have people willing to spend if affordable.
- The microphone: With a microphone, it can be used as a VoIP phone along with the Wi-Fi feature. There were perhaps 2 reasons for its absence. Apple, wants to maintain a good relationship with the carrier community, especially considering it is yet to globalize the iPhone. Secondly, my suspicion is that the GSM chip from iPhone is still in place in the iPod touch. Although it makes economic sense for Apple not to spend design cycles for an iPod that is essentally an iPhone clone, the presence of a microphone will let hackers enable the phone feature as well at no cost.
Looking ahead, the next generation of iPod touch (not knowing when that will come) will have -
- Free browsing on Safari, or at least cheaper and more affordable services with a wider range of applications
- Bluetooth 2.0 or higher, perhaps integrated with Wi-Fi chips
- The microphone will come once the iPhone obtains a stronger foothold. VoIP calls from home or hot-spots will become popular, especially when integrated with a sleek iPod.
On a personal note, I am undoubtedly thrilled. I wanted to get an iPhone but did not think the phone part was worth it. So, apart from the Flash drive, the VoIP feature looks attractive for the future, but I don't think I can wait to get 'touched' by this new gadget from Steve Job's garage.
Read the full article>>
Integration - the hurdles
Thursday, July 26, 2007
On one side, there is an increasing need for GPS on the cellular platform while on the other hand, the technologies in the unlicensed spectrum also are moving towards co-existence. And then, there is dual-mode cellular/WiFi cards. It does not take a veteran to see the future. The writing is fairly clear and the long-term survival of many companies, including the big names, is in their assimilation of this fact and of course, in their execution of their plans.
This being said, it is not easy to come up with such products. Though this would be a coup for any company's marketing department, pulling it off is an entirely different ball-game, at least from the engineering side. Each product comes with its own quirks and is burdened by a zillion tests set-forth by their respective standards bodies. All these standards bodies, till date have not given thought to co-existence. In other words, the tests are written with the assumption that there will be no impairments resulting from other devices in the vicinity or in the same chip. Now, we may argue that there would be enough head-room since the standards-based minimum requirements, especially in the cellular world are fairly low. But note that designers may eventually scrap the bottom of each one of these barrels in terms of getting performance. And then there is a point of diminishing returns beyond which the economics of putting advanced receivers for various technologies in a single chip/card may not be worthwhile as compared to having more basic and cheaper receivers for each of these technologies in separate devices with sufficient isolation.
Also, let us say that under these constraints, the minimum test-requirements are met for each standard, then the question is whether this would result in good user experience. After all, all these integrated features are most sought after in the smart-phones and other higher-segment phones. Users expect to get a better quality of service for the money they put in on these devices. Also, just passing the minimum requirements does not make the cellular carrier happy either since the capacity takes a hit.
As I have high-lighted above, the task of integrating various technologies is a tough challenge although the benefits are huge. It is clear that the company that can juggle all the parameters I mentioned, while understanding the magic mantra, both for the cellular carrier and the customer, would come out on top. The coming days will also give us a clearer notion of its feasibility, both from the technical and economic stand-points.
The suitors for iPhone V2 - Part 2
Sunday, July 1, 2007
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!
The suitors for iPhone V2 - Part 1
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
Looking ahead to iPhone V2
Sunday, June 24, 2007
As Apple heads for V2, its choice of the supplier is likely to be determined by a host of factors apart from the ability to get low-cost chip-sets. Prominent among them are-
- Feature integration
- Power management
- Ease of integration
- have better power management capabilities
- have smaller space requirements for the chip-set (which would also be enhanced by migration to the newer 65 nm technology) implying more room for music storage
- be backward-compatible with GSM networks. This is more a requirement for Apple given that most 3G networks are not pervasive and users are likely to be serviced by both GSM and WCDMA based on their location
Another key factor, of course, is the battery life and all its associated issues like talk-time, music time etc. The iPhone of June 29th already boasts of 8 hours of talk-time which in itself is an achievement considering the electronics that go with it. V2 will have to better this. As alluded to previously, an integrated chip-set would help the cause of power-management. On top of it, Apple, as the phone manufacturer, has to make sure that all its features work efficiently in tandem and that power is conserved to provide for greater up-time.
Third, would be the ease of integration. All factors remaining the same, it is natural for Apple to go for the chip-set vendor who would make their life the easiest. These would include fringe-benefits that are not mandatory for the bare-bones chip-set itself to work. For example, video and audio drivers often act as 'kool-aid' for the phone vendors to make their decision.
These factors form a good frame-work into the companies' iPhone strategy while not over-simplifying the central issue. So, with these in mind, we will, in the sequel, analyze potential candidates for the marriage with iPhone and how the game-plans of a lot of the players may depend on the marriage itself.
iPhone - 3G has to come!
Thursday, June 21, 2007
While the world awaits June 29th to see if iPhone can live up to all the hype and expectations around it, there is another question that looms large: What next for iPhone?
Apple apparently has set a goal to obtain 1% of the US hand-set market share and analyst reports suggest that it may well be a reality. On the other hand, in order to extract maximum value from the wireless industry and also establish pervasive presence, Apple will have to
- expand presence in the U.S.
- enter other markets
Expansion of U.S. presence: iPhone is entering the U.S. market with GSM, a standard that Cingular A.T.&T supports. Cingular also has an exclusive iPhone license for a couple of years. Thus in the U.S., Apple's market share increase depends, to a large extent, on its charm influencing customers to migrate from other carriers to Cingular. While the iPhone perhaps has that attractiveness, it is a very costly proposition to do so. Apart from the high-price of the phone, the cost of breaking existing phone contracts is a likely deterrent to any major migration. The lowest someone is looking at to switch is $650, an amount the average phone-user is unlikely to pay up. The initial sales are likely to come from the business population (that too only for people who look at a highly integrated device) and the gadget-crazy youngster for whom owning an iPhone may be a 'cool thing'. This said, unless the phone performs or if Apple comes up with improved future versions, the 1% figure for sales can stagnate.
Performance implies good voice quality and reasonable data speeds apart from all the innovative features in the phone. These in turn depend on a) the base-band chip-set currently in use and b) the data rates supported by the standard itself. The Infineon GSM chip-sets in the iPhone probably have a good and cheap design, something imperative to keep the overall cost as low as possible. On the other hand, GSM is limited in its data-speeds. And that is also the reason why 3G has gained prominence. HSPA systems can offer higher nominal rates. But the point is, in the U.S., among the non-CDMA providers, only GSM is prevalent. WCDMA networks are being built only now and that too in major cities alone. As I have mentioned in a previous article, the economics of the iPhone would be prohibitive if 3G support were provided because the chip-set will have to be dual-mode: one that supports GSM and WCDMA. This also has an impact on the power management side. Secondly, the data-using population is miniscule. To optimize the phone for a small fraction of the population which is data-savvy may not have been a good strategy for the first version. Granted that this very segment of population also has the highest probability of owning an iPhone but there needs to be a balance. To provide for the needs of that cross-section however, iPhone has Wi-Fi capabilities coming from the Marvell chip-set. To me, it is a great move since Wi-Fi speeds are way higher than the cellular speeds. Besides, it is important in the context of all cellular manufacturers migrating towards an integrated Wi-Fi/cellular chip-set. In other words, while the cellular chip-set companies are slowly recognizing the importance of Wi-Fi integration with cell-phones, Apple is already one-up on them with Wi-Fi being touted as the answer to high-speed data despite the limited coverage options. The notion at Apple is that for their current market penetration strategy and their pricing, 3G is unattractive. Also, if the phone does live up to the hype and more people feel at home parting with around $600, then Cingular would gain a lot of customers and Apple does not have to worry as much about expanding their US presence to other service providers.
Now when would the market call iPhone a failure? I would not doubt the user-interface or the iPod aspects of the new gadget.My doubts would be on one or more of the following-
-the base-band modem features have multiple issues with voice-call processing, interoperability etc.
-user-data experience in the GSM network is below expectations both with respect to speed of connection and services
-interoperability of multiple features like data, voice and music is not as good as anticipated.
The bottom-line: people could get the feeling that they are not getting their money's worth and if that happens, then all the talk of iPhone changing the way people think of cell-phones may not hold water.
If the first version does fail, then Apple will have to scamper for the next revision. It appears that with further advances on the power management side and more integrated features, Apple might be able to meet the demand for higher data-speeds with 3G for the same costs easily. That apart, Apple will have to strike a balance between a)getting more pervasive through other service providers and b) maintaining an aura of exclusivity and snob value. It looks like 3G may hold the key for the next version, more so in case of failed expectations.
Expansion into other markets: The primary target for the iPhone expansion would be Europe where high-end phones are more likely to be sold. Apple would love to get into a market like India, but there is a basic lack of synergy between the Indian model and the Apple strategy, at least by the looks of it. India pretty much thrives on low and medium-end phones and the profits and operating margins are fairly low. With its prohibitive costs, the iPhone is unlikely to cause a huge frenzy in India and the likes. Europe thus becomes a natural next step. With UMTS networks widely deployed by Vodafone, Orange and 3, it is obvious that the iPhone in Europe will invariably have to be 3G ready. If a European iPhone were to come out in the next few months, it is likely to be costlier than its American version given the economics of having the dual-mode phone. The business population of the rest of the world however may have to make do with the GSM version if and when Apple decides to look beyond Europe.
In summary, even for iPhone to survive into the future, leave alone dominate it, Apple will need to go 3G. Many in the industry understand this and are positioning themselves to win the big prize: a place in the iPhone. In fact, it seems that the survival of some of the chip-set vendors may in turn depend on an Apple acceptance. In the sequel, we will examine the various options Apple has in front of it and the factors it may have to consider before it picks chip-sets and vendors.
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