Dont forget the Feature Phones!

Lost in the building fervor over the raft of new smartphone devices expected over the next six months (3G iPhone, Blackbery Bold, HTC Diamond, etc) has been the absolute onslaught of new high-end non-smartphones (or "feature phones")from LG and Samsung. This is a definite mistake as the unit volumes of these handsets are likely to be absolutely huge and have as much impact on marketshare for both the semi and handset players as the upcoming smartphones. The Samsung Soul has hit the market to rave reviews and the LG Secret is getting similar early press before its launch at the end of the month. Both these devices, as well as others such as the Samsung F480, pack in 5 megapixel cameras, touchscreens, user friendly interfaces and top of the line display technologies into some very hot form factors. It is these devices that are driving Samsung and LG's share gains as well as the continuing momemtum in Qualcomm's chipset business.

The question is when Nokia/SE/Motorola will manage to respond. The current announced products from those vendors for the 2nd half of the year simply dont measure up to what LG and Samsung are putting on the market right now. The combination of these feature phones and the newcomers to the smartphone segment present a serious challenge to the high-end shares of the current market leaders. Both TXN and Nokia are bouncing today on an upgrade from SSB, but I must say I'm not optimistic about their prospects in the 2nd half.

Motorola up to bat at CTIA

A new video on Youtube (since been pulled) looks like it has provided another set of leaks of Motorola's upcoming lineup. Yes, the ones that were originally scheduled for MWC, but were mysteriously pulled at the last minute. Some details and specs are available here.. The 5 Megapixel Kodak enabled handset is the most interesting, but the rest of the devices look like updates to existing designs. If these leaks accurately reflect Motorola's roadmap for the 2nd half of the year, I am decidely underwhelmed.

Right now I'm guessing that Motorola will do better than 2.5G for their Kodak enabled handset and/or just a couple of updates to the Q/Ming, but if not, it really could get worse during the 2nd half of the year. Amazing.

EMP vs. Qualcomm

It wasnt quite an earthquake in the mobile world, but Sony Ericsson's decision to use Qualcomm for their baseband/apps processor in the Xperia was certainly unexpected. After all, the two companies have never been friendly, with Ericsson being one of the six companies that brought an anti-trust complaint before the EU in 2005. On top of that Ericsson has their own in-house chipset division in EMP which is the source of the vast majority of their 3G chipsets. The choice of Qualcomm for the handset was at least as curious as their choice of Windows Mobile.

Well, now we know the reason for that choice. This above specs detailing the EMP enabled ASUS ZX1 tell the story, and it isnt pretty. The fact that the EMP U360 needed to be paired with a TI OMAP2430 to run Windows Mobile with a touchscreen wasnt surprising, but the resulting 3G talktime is stunningly abysmal. A 90 minute talk time guarantees that this handset will be a commercial flop (though the GUI looks very cool). Luckily for shareholders, Sony Ericsson was flexible enough to go in another direction.

This is going to lead us to an interesting decision for Sony Ericsson later this year. The Xperia X1 was the highlight of Barcelona and interest from various mobile forums make it look like it will be a smashing success. So, where will Sony Ericsson go for the baseband of its successor? The EMP U380 is due to be released in the 1st half of '09, so it is the most likly winner....but a succesful X1 launch might give Qualcomm a realistic shot at continued business within SE. That is something I never would have expected a year ago.

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.

MacBook Revamp

Dissapointing.

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.

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 '09....it is going to be a long wait!

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.