CSR Buys in GPS

Bluetooth specialist CSR is spending $75 million to buy its way into the GPS chip market.

The Cambridge, U.K.-based firm is spending $35 million to buy the assets of Cambridge Positioning Systems, as well as making an initial cash payment of $40 million for Swedish company NordNav. CSR intends to use the technology to deliver low-cost positioning chips for mobile phones by the first half of 2007.

The firm is promising that its software-based GPS system will cost less than $1 when used with its Bluetooth chips -- a pricing level that would open up the GPS market for lower-end phones. This is familiar ground for CSR, a company that started life as a low-cost Bluetooth chip company and has recently been adding to its technology portfolio by buying into technologies such as fixed/mobile convergence (FMC). (See CSR Moves on Convergence and CSR Acquires Clarity.)

Implementing GPS in software is expected not only to reduce the cost of such systems but also to cut the size of the chips used in GPS-enabled phones. This could be particularly important for margin- and size-sensitive cellphone vendors.

ABI Research claims that the overall GPS market will be worth $22 billion in 2008. (See ABI: GPS Worth $22B in 2008.) Some of the major players in the wireless cellular market include Royal Philips Electronics N.V. (NYSE: PHG; Amsterdam: PHI) , Qualcomm Inc. (Nasdaq: QCOM), and SiRF Technology Holdings Inc. (Nasdaq: SIRF)

CSR could spend more on the NordNav acquisition if all goes well. The terms of the buyout are an upfront cash payment of $40 million with a further $35 million in cash payable over the next three years, if NordNav's management hits certain targets.

— Dan Jones, Site Editor, Unstrung

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