Thursday, February 28, 2008

Bit Pipes are the Future

Unlike just about every other wireless operator in the world, Sprint is moving to embrace its roll as a bit pipe to its customers. The price plan they announced this morning delves perfectly with their plans for their upcoming WiMAX network.

These moves are going to have a profound impact on the wireless industry in the US. The combination of the next generation of touchscreen mobile OS's with flexible pricing and open networks is exactly what the industry needs to drive the innovation/adoption life cycle. The key is simplicity on all fronts and we are seeing moves across the board towards that goal. The industry is going to look quite different when the iPhone isnt alone in driving huge amounts of web traffic from mobile phones.

Sprint might be good for a turn around play, but I see the real winners in the smartphone/chipset and content spaces.

Tuesday, February 26, 2008

MacBook Revamp


That is the first word that comes to mind when looking at the new MacBook's that Apple released today. The spec upgrades were sorely needed and the addition of multitouch to the Pro line is nice to see, but overall, I think expectations were higher. These upgrades certainly wont provide any sort of step function boost to Apple's sales in the near-term. I am more than a little surprised that Apple didnt attempt to incorporate facets of the Air's design into this upgrade. The current design is getting a little long in the tooth.

Friday, February 22, 2008

The Next Generation of Mobile OS's

The hype over the iPhone was absolutely overwhelming and while sales have only been lukewarm thus far, there is one area where it did live up to its billing. It truly has changed the game in terms of the development of the mobile OS. Intuitive, receptive and just downright fun to use, the iPhone is light years ahead of the competition. However, Barcelona gave us an idea as to what some of the competition has up it sleeve. Most have rightly focused on the development of Android, but I think Nvidia's demonstrations provided a far more revealing look at the capabilities of the next generation of OS's.

As one blogger wrote, it looks like it is right out of Minority Report.

Now Nvidia isnt in the OS business. They were just using this as a demonstration for their ARM11 enabled AXP 2500 processor, which is what makes this demonstration all the more stunning. They put that OS together in five weeks. Imagine what Apple, Sony Ericsson or Nokia will be able to do when they get their hands on that kind of horsepower. Unfortunately, the AXP 2500 wont be available in handsets until the 2nd half of ' is going to be a long wait!

Wednesday, February 20, 2008

Joining the hunt for the 3G iPhone

There has already been a vast amount of speculation as to the timing of the 3G version of the iPhone. This is for good reason. A late year launch would mean drastic price cuts would be needed to keep sales going over the summer. The handset market moves much to fast to keep a year old device selling for $400 relevant to the majority of consumers. Conversely, a late spring launch would bring a jolt to iPhone sales that I think would go well beyond most analyst expectations. The customer satisfaction numbers for the iPhone are off the charts, but the fact that it is well known that a 3G version will launch in '08 has kept many consumers on the sidelines. Nobody wants to buy the current iPhone only to see a more advanced version released a month later.

So the question is, how do we narrow down the launch window for the iPhone? I think the best clues come from the suppliers. The baseband and applications processor for the iPhone are, by necessity, going to require the latest and greatest chipsets.

The Baseband

Infineon won the 2G iPhone slot with their ARM9 enabled S-GOLD2 EDGE baseband. This likely gives them the inside track for the 3G iPhone, though it is by no means a lock. Infineon has stated that their S-GOLD3 HSDPA processor will be in volume production in the 2nd quarter. They have been close mouthed about the identity of any customers for this chip.

Qualcomm is also a possibility though I'd place the odds considerably lower than for Infineon. One advantage to Apple for going with Qualcomm is that they have a much better application processor combined with their baseband. The MSM7200a is a 65nm chipset with a 528MHz ARM11 enabled apps processor. In the past, Qualcomm has indicated that this chip would be capable of running the iPhone. I have my doubts though that it could do so without another dedicated apps chip. However, coupling the MSM7200a with an apps processor would provide more than enough horsepower for a fully featured iPhone (5 megapixel camera, GPS, 30fps video capture). The MSM7200a sampled in the 1st quarter of 2007 and I believe that volume shipments would likely begin in the spring.

Broadcom is the last of the likely candidates. At one time, I had thought that the iPhone could be their break through win in the mobile space but I think that this has become unlikely. The press has focused their attention on the single-chip HSUPA chip that they announced in October, but this chip wont show up in handsets until 2009. Their ARM11 enabled HSDPA chip that was announced last February (BCM2153) is a possibility, but Broadcom's public comments on wireless have downplayed the prospects for wireless in 2008. It seems unlikely that this chip is going to get much traction.

Apps Processor

Many choices, but porting the iPhone OS to a new applications processor seems unlikely unless it involves the battery/cost savings of a converged chipset. That means that Samsung's 2G design win is going to give them a considerable advantage in the 3G slot. Their 2G chip was the S3C6400, which was a 667MHz ARM11 enabled processor on a 90nm process. The 65nm version of this chip (S3C6410) is due to begin sampling in May with volume production in the 3rd quarter. As they did with the S3C6400, it is entirely possible that Apple will get early access to a custom version of this chip.

My best guess is that Apple will go with a repeat of their 2G iPhone partners. Infineon and Samsung both look to be in position to have volume shipments of the required chipsets by the summer. While the exact timing would be nice to know, I dont think it is necessary to profit on Apple. The key is that they should be able to avoid the worst case scenarios of a November launch. That would have been disastrous for the summer/fall sales and would have left them launching directly opposite Nokia's expected S60 touchscreen device. A late spring or summer launch avoids this and sets Apple up to do very well in the back half of the year.

Thursday, February 14, 2008

The iPhone's Stunning Search Numbers

We all know that the iPhone has changed the rules of the mobile handset game....watching the other handset manufacturers fall all over themselves in their rush to embrace touchscreens is just one sign of the new environment. However, even knowing that the iPhone has caused a revolution doesnt diminish my astonishment at these new numbers from Google

50 Times!

That is how many more Google searches have been performed on the iPhone than any other mobile handset. While this data is obviously skewed by the Apple-Google partnership, the overall trend is backed up by the browser stats that have been released. You can argue endlessly about the merits of the iPhone, but it is indisputable that the iPhone has transformed the mobile internet. The rest of the industry is trying to adapt with the touchscreen S60, Android, and Xperia heading the list of new initiatives. Unfortunately, all three of these were still in very rough form at MWC, so we wont have a very good idea on their progress until the end of the year.

One question I'd like to have answered, does Google split any of their search revenue with Apple? That built-in search box could eventually become a very lucrative piece of real estate for Apple and their search partner.

Wednesday, February 13, 2008

New Version of Android


One of the more odd developments to come out of Barcelona was the varied stages of Android development shown by Google's chipset partners. TI was showing a small form-factor handset running a functional, though limited, Android OS while NEC and Qualcomm had development boards running their versions. The user interface was different but I had assumed that they were just different versions offered in the original SDK.

Well, mystery solved. It looks as though Qualcomm and NEC were actually giving sneak peaks of the next version of the Android OS. Here is a screenshot of Android running on the MSM7201a from Qualcomm.

It looks like the Android is still on schedule to have the first handsets out on the market by late '08 or early '09. HTC is the most likely suspect to win first to market bragging rights.


An interesting report out of Lehman this morning that states that Nokia's N96 actually contains a Nomadik apps processor from STM. The question is if this win is due to missteps out of TI or just indicative of Nokia's ongoing attempts to diversify their supplier base. Regardless though, this is a high profile win for STM and may help them gain some traction in the apps processor market. However, I'd like to learn a bit more about what chip is inside. Is it the 90nm ARM9 enabled STn8815 or an early sampling of the 65nm ARM11 enabled STn8820? In either case, Nokia clearly has some work to do with their apps processor partners in improving the power consumption of their platform.

Implications for TI? Well, this continues the move over the last year of Nokia to diversify away from their dependence on their long-time chipset supplier. TI will need to stay an "ARM" generation ahead of the competition. The Cortex enabled OMAP3430 will do that, but timing will be much more critical than in past design cycles.

Tuesday, February 12, 2008

Nokia's Aging 3G Platform

The Nokia juggernaut rolled over the handset market in 2007. The Motorola collapse was the gift that kept on giving, with new highs in margins and the long-term goal of a 40% share finally achieved. Naturally, analysts have extrapolated this success into 2008.

However, I think the announcements coming out of Barcelona are giving the first signs of storm clouds on the horizon. The four handsets that Nokia has launched have some relatively impressive specs, but those mask the fact some underlying problems with Nokia's 3G platform are starting to show. You can see the evidence in just one number from the Nokia N96.

150 minutes.

Yes, that is the 3G talk time for Nokia's new wonder phone. It is also the 3G talk time for the 6220 classic. Now, two and a half hours might be good enough for the anorexic 10mm fashion models that are pumped out of Samsung on a regular basis, but it is an awful number for work horse handsets like the 6220 Classic and the N96. The threshold for acceptability for battery life in handsets is for it to last a full day under heavy usage, and these handsets are very unlikely to meet that challenge. Worst of all is the release date for these two handsets....a Q3 release means that the underlying platform for these handsets is likely to represent the bulk of the units for this Christmas selling season.

So what has gone wrong? Simply put, Texas Instruments is late with their next generation OMAP processor and getting later by the day. The OMAP3 was originally supposed to ship in volume in 2007, but that slipped into "early 2008". No big deal, the competition was just catching up to the multimedia specs of Nokia's Nseries and OMAP3 would allow them to reassert their lead. However, the timing of the 6220 Classic and the N96 means that it is very likely that OMAP3 has slipped again. The question is how late? Word out of Barcelona is the 2nd half of '08 with substantial volumes showing up in '09.

This is going to represent a real problem for Nokia in the high-end during the 2nd half of the year. The N95 was a monster hit during '07 with consumers overlooking its thick dimensions and awful battery life for the privilege of getting a 5 megapixel camera, GPS and multimedia player all in one package. The N96 will still have a lead in some specs versus the competition, but the gap has pretty much been closed. As consumers shift their focus from the features to the battery life and size, competitors such as LG, Samsung, SE, and HTC are going to pick up share in this lucrative market.

Does this spell the end for Nokia in '07? Clearly not, but I dont think analysts are forecasting this erosion for Nokia on the high-end. It will mean a small hit to share, but a larger hit to margins and earnings.

Monday, February 11, 2008

Qualcomm Confirmed

I love it when a plan comes together :-).

Engadget confirmed that the Xperia is a HTC product and I can now say with certainty that the processor powering the Xperia is the MSM7200a. This is the 65nm version of the original MSM7200 and has a 528MHz ARM11 processor as well as ATI Imageon video acceleration hardware.

Of course, the question now shifts to whether Qualcomm can leverage this design win to grab any more share within Sony Ericsson. EMP has already announced the U380 which will integrate TI's OMAP3430 to support Windows Mobile as well as Symbian and UIQ. It is scheduled for the 1st half of '09.

Regardless though, this is a very big win for Qualcomm and shows just how well they are doing against the competition. TI's OMAP processors had absolutely dominated the high-end of the WCDMA/HSDPA market, but it looks like the MSM7xxx series is changing that.

Sunday, February 10, 2008

Sony Ericsson's latest...Qualcomm inside?

Xperia, the new flagship handset from Sony Ericsson, is interesting on all kinds of levels. Most intriguingly, this is the first handset from SE that boast Windows Mobile. This leaves Nokia alone in their continued thumbs down to Softie's mobile offerings. It will be interesting to hear SE's executives reasons for choosing this path.

I would also add that this is SE's most direct response to the iPhone revolution. I love the iPhone, but this combination of large scale touchscreen with a slide out keyboard is going to represent an interesting challenge for Apple. The iPhone's interface is good enough for short messages/emails, but I dont think it can compare to a full QWERTY keyboard for anything in long-form. Of course, the OS on the touchscreen is going to be key. Has Sony Ericsson been able to transfer their successful Walkman UI to the Xperia? The Walkman line of handsets has been a monster hit outside of the US and the music player is considered to be very good in offering both ease of use and advanced options for mobile users. This will repsent quite a challenge for Apple as the iPhone has failed to gain much traction in Europe. This, along with the various new handsets from LG and Samsung, really place the pressure on Apple to get v2 of the iPhone to market well ahead of Christmas '08.

Moving onto a slightly more speculative topic, this looks like confirmation of the rumor last year that HTC would be supplying Sony Ericsson with Windows Mobile devices. The form factor of the Xperia is very much like a variety of HTC products. The use of an ODM for what looks to be a flagship device might just give investors an idea as to how much handset manufacturers want to have a response to the iPhone in '08. While the identificiation of HTC as the supplier is a relatively easy call, it leads to something more substantive....the likelihood that Qualcomm is supplying the baseband for this handset. HTC's 3G lineup is universally based on Qualcomm basebands. It is possible that Sony Ericsson mandated the use of EMP for this handset, but some other specs add to the possibility of Qualcomm. When was the last time Sony designed a product that didnt support Memory Stick? I would also add that AGPS is a Qualcomm standard enabled feature but something that hasnt been seen to date with EMP enabled products. This looks like a HTC design, and that means that Qualcomm may have found a back door design win into a major new product from one of their traditional European adversary's. This would be a huge win for Qualcomm as SE's 20% WCDMA market share has generally been seen as closed to their chipset.

If confirmed, this new win would be a real feather in the cap for the chipset team at Qualcomm. They have been laboring under a market cap ceiling of about 35%, and the share price has reflected that. An opening into another 20% of the market would provide a very nice boost to Q's long-term outlook.

Wednesday, February 6, 2008

Motorola's Saviors?

These look like early prototypes of handsets that should be announced next week. The rumor mill is focusing on the bottom handset which is the new Z12. Specs supposedly include a 2.8" touch screen with VGA resolution, 5 megapixel camera with Xenon flash, GPS and WiFi. Though a year later, it looks like a beautiful answer to the N95. This type of announcement should be an investable event if we could be sure about the timing of the product release. Anything within the next six months would likely be well received by the market.

Friday, February 1, 2008

The Gang that couldnt shoot straight

Considering their track record, Motorola's announcement that they are looking to restructure their handset shouldnt be a surprise, and yet, this takes the cake for this once proud company. The timing simply couldnt be worse. The division is bleeding money, the capital markets are closed, and we are likely entering a recession. It will be impossible for Motorola to extract any value out of a transaction.

Why not wait until after the glimmers of a turnaround have been established? In addition to Kodak, Freescale also confirmed that Motorola's new platform is on track for a summer release. The only explanation is very ugly indeed....the internal schedules for the platform release must be much worse than those given by their suppliers or those expected by the Street. An '09 release for new products would mean the losses in the mobile division would reach truly horrendous proportions during the Christmas quarter.

So take your pick, either Motorola's management has created a new standard for "selling low" or the platform group is going to need at least another six months to complete a turn around that was supposed to have occurred over a year ago. An ugly choice indeed.