Let the consolidation begin

Posted: 10.18.04

Those lucky sods of you out there who have purchased our fantastic definitive market report on multimedia devices in handhelds, who bask in the confidence and glory of now knowing everything there is to know about the market, also know that the report predicts a consolidation of the players as too many suppliers chase too few customers for the same orders. Not a new phenomenon but something that everyone seems to have to learn again and again.

The big news this week was Qualcomm's $170 million acquisition of Iridigm Display Corp., and the surprise of Broadcom's $120 million acquisition of Alphamosaic.

Qualcomm reaches out

Qualcomm's move, in acquiring the rest of Iridigm (they already had 14% of the company), shows they plan to own more of the platform and see Iridigm's super low-power MEMS interference light modulation scheme (which they call iMoD) as the way to push handhelds to the next level—i.e., larger, higher resolution, screens but without the battery load that are less expensive to build than LCDs. With the inclusion of color displays in all types of phones, including models at the low end of the market, the cost of the display has become an even more significant driver in the overall cost of the handset. An iMoD display should cost significantly less to manufacture. Qualcomm is now in position with the recent ATI deal to offer end-to-end solutions for hand-helds. This is very cool stuff, but equally important, it shows how the big boys will dominate the market.

And Broadcom takes some marbles home, too

Broadcom is also big, and no newbie to the handheld market. The company made its first move in April when it acquired Sand Video, a video compression company, for $77 million. Broadcom withdrew Sand from the market and assimilated it. Broadcom currently provides cel-lular OEMs with EDGE/GPRS/GSM baseband processors and is now sampling WCDMA baseband processors as well. The company was first to demonstrate high-speed "four-slot" EDGE performance at greater than 200 Kbps, and they recently acquired Zyray Wireless (for $96 million), a developer of WCDMA baseband co-processors, which enable up to 384 Kbps of wireless data connectivity.

Now Broadcom has picked up one of the more innovative companies in the media processor biz, Alphamosaic (see last week's issue of TechWatch, Sept. 6, for a description of their VC02 media processor). Alphamosaic's products are offered as discrete co-processors and will also be integrated into Broadcom's cellular baseband and application processor roadmaps in the future. Alpha-mosaic's first-generation VC01 multimedia co-processor is currently being used by Samsung, and we expect them to pick up the VC02 and some other products coming out of Alphamosaic's lab, which we saw a couple of weeks ago. Alphamosaic is doing about $8 million in sales this year, and had expected that to skyrocket to $30 to $40 million next year.

More consolidation will happen, and we even have a few clever guesses about who—I'm sure you do, too.

A new market segment—HVP

ATI has done a clever thing and created a new market segment, for which we'll have to come up with a name. They've built a chip that uses the bandwidth of PCIe to allow use of the system memory for graphics memory, much like an IGP does. It's a tweeny—between an IGP and a stand-alone or dedicated VPU, and they call it HyperMemory. Hybrid might be better, and maybe that's what we'll call it, an HVP.

Intel's new Extreme Graphics 3 is a kick-ass part that can run DirectX 9 games, and is a challenge to market leaders ATI and Nvidia. This HVP offers a lot more power for a fraction more in cost and could blunt some of the gain Intel will make with the new Grantsdale-G.

If the concept gets any traction I expect to see Nvidia, S3, and XGI come out with similar offerings.

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