10
April
2005
|
19:22 PM
America/Los_Angeles

Consumer electronics chip markets don't favor the small...

By Tom Foremski for SiliconValleyWatcher


Wireless networked handheld multimedia devices are clearly in our future, and our scoop last week about Apple choosing Broadcom’s Alphamosaic chip highlighted an issue that faces smaller chip companies--independence.


Alphamosaic, based in the United Kingdom, was acquired by US communications chip giant Broadcom in September for about $125m. Alphamosaic had raised $9m in a round just five months prior to the sale. That was a nice turnaround of capital for the VCs but it was also likely that Alphamosaic did not have much of a choice.

That’s because companies need a lot of intelectual property (IP), in the form of chip functions, to play in the digital consumer electronics market. As more and more functions get integrated onto a chip, the cheaper the consumer product. In the consumer digital space that means you need as much wireless, video, image, audio processing, as you can fit on the chip. Then you need cellular, and room for other, future functions too.


The Alphamosaic chips packs a lot, but probably not enough for a large electronics manufacturer such as Apple. But, by being part of Broadcom, which has all the communications IP, etc, the future offers possibilities of further integration. This brings up the question of whether smaller chip companies can compete long-term in consumer electronics markets by remaining independent. The first ones to land larger dance partners will be in a better position than those without, I would think.


Convergence below, divergence above


Interestingly, as more convergence occurs on the chip—there is increasing divergence occurring in the consumer devices. A PC is used to play a DVD, play games, play music, and view photos. Now each activity has its own product device available, and now some are becoming portable and wirelessly connected.


And with more wirelss conectivity, it’s all moving towards less of a PC centric model than ever before, less need for a PC or Mac in order to use these devices.


Is this the future personal computing platform? Fragmented into applications married to devices, and sharing a common communications platform--instead of the same hardware/software platform.


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