Freescale Doesn't Fear Broadcom
Freescale contends that the kind of chip Broadcom is reportedly delivering will target a high-end market that's still years off. The real money, for now, is in a lower-end optical network terminal (ONT) without frills like voice over IP (VOIP), says Tim Mayette, who manages marketing and business development for Freescale's digital home operation.
"The GPON portion of the market overall hasn't taken off as fast as a lot of the analysts had anticipated," Mayette says. "We're trying to seed the cost-effective portion of the market, to get the volumes up."
Multiple sources point out -- heck, everyone points out -- that GPON has only begun shipping in noticeable volumes, meaning it's still hard to declare any trends as being definitive. Moreover, GPON prices have more to do with optics than with chips. (See Who Makes What: GPON Equipment.)
Even so, there's starting to be some jockeying for position as more chipmakers challenge established GPON players, particularly BroadLight Inc. (See Mindspeed Joins GPON Race, Ikanos Joins GPON Arms Race, and TranSwitch Unveils GPON Chips.)
Broadcom could be the latest one to join -- selling chips to Alcatel-Lucent (NYSE: ALU), as analyst Andrew Schmitt of Nyquist Capital unearthed last month. (Broadcom hasn't commented.) (See Broadcom Breaking Into GPON?)
Supposedly, Broadcom and AlcaLu are building for future FiOS deployments at Verizon Communications Inc. (NYSE: VZ). The Broadcom chips reportedly support the Multimedia over Coax Alliance (MoCA) standard, leading Schmitt to conclude that Broadcom's real target is home networking, rather than GPON specifically.
That could pose a problem for Entropic, the chip company that created MoCA. (See Entropic Plunges on Broadcom Fears.)
Freescale isn't so worried, though, because Broadcom appears to be aiming for home gateways. According to Mayette, though, carriers are more interested in low-cost ONTs than in home-networking plays, and Freescale is hearing indications that a substantial gateway market might not emerge until 2012, he says.
"To offer an ONT that is fully loaded doesn't make sense for a service provider," says Aileen Arcilla, an analyst with IDC . "They're just looking to get the deployments out there."
That's why Freescale is going in the opposite direction. The company came out last week with a lower-cost GPON processor, the MSC7104. It's a sequel to the MSC7120, with fewer bells and whistles -- no digital signal processors (DSPs) for handling voice traffic, for instance.
"We have a gateway chip on our roadmap and are going down that path as well. But we've gotten such strong feedback from the operators that they're not going that way for some time," Mayette says.
That would give Freescale some breathing room. It also suggests AlcaLu, Freescale's flagship GPON customer, wouldn't necessarily be defecting to Broadcom right away.
Freescale points to a GPON rollout recently announced for Suo Cable in Japan, possibly the lone GPON outpost in an otherwise EPON-destined country. It's going to be built on AlcaLu gear that uses Freescale chips, Mayette says. (See Suo Cable Picks AlcaLu GPON .)
— Craig Matsumoto, West Coast Editor, Light Reading