Travelling On The Silicon Road

In the land of the technical gizmos’ (especially cellphones) savvy a.k.a –the land of the rising sun, the cellphone firms are targeting the senior citizens. With the maturing of cellphone market for teenagers, companies do need another segment to sell their wares to; and countries with growing senior citizens’ population are an ideal target for the same. 

The combination of real need and marketing savvy could explain the high penetration rate of mobile phones among older Japanese. And success in this market can be replicated in other countries. As I cited in an earlier post (Nov ’06), I’ve found it rather strange why the cellphone vendors had not capitalized on this viable market segment  

There are 2 different markets for the handsets: feature-rich 3G phones and ultra low-cost (ULC) phones. The former is predominantly the developed countries and the developing countries form the latter.

According to ABI Research, “The developed markets’ high saturation rates mean that over 80 percent of new mobile phone subscribers in the next five years will come from emerging markets.”

These ULC handsets have changed the dynamics of business.

Using commoditized technology (read “multiple providers”), has given handset makers a wide array of vendors to choose from e.g. Nokia has moved from relying exclusively on TI for baseband chips to partnerships with STMicro, Broadcom and Infineon – thus providing it design flexibility as well as price negotiating power.

A fine example of a low cost phone is Tianyu 8811 which has achieved low costs by using proven, mature technology and adopting a minimalist approach. For a tear down on this product, I suggest to read Jeff Brown’s article 

The recently unveiled $2500 car (named Nano) from India’s Tata is a prime example of achieving low costs with minimalist approach

As cited by C. K. Prahalad, professor of corporate strategy at the University of Michigan Business School, a huge market awaits at The Bottom of the Pyramid.  

Mobile connectivity was the main thrust in the recent Intel Developer Forum. The company said its 45-nm Penryn-based Montevina processor technology due out in 2008 will be the company’s first Centrino processor for notebooks to offer the option of integrated Wi-Fi and WiMAX wireless technologies in an adapter code-named Echo Peak. This option would ensure customers do not necessarily need to make a choice between 3G and WiMAX.  Montevina also boasts the capability to run both HD-DVD and Blu-Ray for media applications. The new PCs and motherboards will be rolled out by Lenovo, Acer, Asus, Toshiba and Panasonic. Intel is investing with KDDI in a trial in Japan in addition to the well publicized trials by Sprint & Clearwire in the US.
 
In the old times, system providers used to put their bets on any 1 standard (amongst the few major competing ones) and come out with a product based on that standard and see how the market reacts. Now, they roll out products supporting all the standards (or at least the major ones) lest they lose out on the market share. So it is 3G and WiMAX, HD-DVD and Blu-Ray…….
 

I read this interesting article by Cliff Edwards in the recent edition of Business Week.

It talks about how Intel’s “Broadband Man” (EVP, Sean Maloney) garnered support from Samsung, Motorola, Nokia and Sprint to get this technology to its present state.

The key technology was obtained by Intel when it purchased a company called Iospan Wireless from a Stanford university professor Arogyaswami Paulraj. Maloney then went on to woo the industry heavyweights for this standard (AT&T had earlier, in 2000, tried a precursor to WiMAX in Project Angel. The project however was a non-starter because of lack of industry standard and support)

While Intel has declared 2008 to be the year of WiMAX, the technology and businesses built upon it still have a lot to prove and better & cheaper devices are needed to get to mass market adoption. However, several big companies have a lot at stake here and it does look poised to alter the communications landscape; or as Ottelini said: we are on the cusp of a new global network.

LSI Corp. has signed a definitive agreement to sell its mobility products business to Infineon Technologies for $450 million in cash, plus a performance-based payment of up to $50 million payable in Q1 2009. The sale does not include any production facilities. And about 700 LSI employees will join Infineon.
 

LSI’s mobile business involves mainly mobile radio baseband processors and platforms. While this signals a fabless step from LSI as well as a move towards shedding all its non core biz (LSI’s focus is storage & networking), it signals a larger move of consolidation in mobile communications and for Infineon specifically, this marks it’s strengthening hold in communications biz and its position at important mobile phone makers. It follows its recent acquisition of TI’s DSL CPE unit. 

There has been a recent commentary that this decision from Infineon is not technology driven; rather it is to tap on LSI’s customers for its baseband chips.  Now LSI’s top customer here is Samsung and although Samsung is a big client, it has also been losing share as 3G sales have increased; so this doesn’t sound entirely conclusive.

Also Nokia, which has a third of the world’s mobile phone market,  had recently announced that it would outsource all of its chip manufacturing to Infineon, Texas Instruments, Broadcom and STMicroelect ronics. This acquisition will strengthen Infineon’s position which is also recovering from the major setback of having insolvent BenQ Mobile as its largest customer.

Cisco and IBM are planning to develop a platform based on open standards to allow unified communications and collaborations in their applications. IBM will offer a set of application programming interfaces (APIs) as a subset of its Lotus Sametime collaboration software and Cisco will offer communication APIs for accessing voice and video services.
Cisco and IBM also will roll out “specific client offerings” based on the new platform and a set of “plug-ins” to combine the collaboration and unified communications capabilities of both companies.

I had written about the adoption of a similar approach in the EDA industry (Why can’t we do it in EDA). Especially with DFM and other UDSM challenges (and not to mention the standards’ war!), it is to the advantage of the designer if he can get the best of all tools in a unified integrated design flow. Since no single vendor can handle this on its own, a collaborative approach looks to be the best bet.

While most other competitors foresee more growth in China, Cisco sees an edge in India and is investing heavily there. The things going for India include an unregulated economy, less competitive environment & a growing market . It’s worries in China include weaker IP protection laws and an edge to home grown local companies like Huawei, Harbor Networks etc. through loans and government support.

The Cisco-ZTE co-operation agreement will let Cisco take advantage of ZTE’s position in the local service provider market and it’s customer knowledge.