Holding Out for a Chipset
Qualcomm is buying the early pioneer of the multiple-input/multiple-output (MIMO) wireless LAN technology with its acquisition. There is no direct equivalent that firms such as Broadcom Corp. (Nasdaq: BRCM) or Intel Corp. (Nasdaq: INTC) could acquire. Indeed, Broadcom, Intel, and Atheros Communications Inc. (Nasdaq: ATHR) already have, or are working on, so-called pre-802.11n chipsets.
"Qualcomm wanted Airgo for that fundamental MIMO technology," says Bob Wheeler, analyst at the The Linley Group . He doubts that Qualcomm will continue to develop Airgo's "pre-draft-n" PC chipset much further and wonders how easy it will be to incorporate that technology into mobile phone silicon. Currently it looks as if the final 802.11n specification will be ready by summer 2007 with fully compliant products out by the end of the fourth quarter.
The other major vendors in this market -- Broadcom and Atheros -- are likely to continue to develop chipsets using the latest draft-n specification as their guide. Some industry wags even suggest that Qualcomm's acquisition of Airgo may help to speed the ratification of the spec.
Intel, meanwhile, has just shown off a prototype chipset that includes 802.11n and WiMax connectivity. The chipmaker is aiming to start sampling the Connection 2300 chipset towards the end of 2007. (See HP & Cingular Push 3G Notebook.)
Intel has tended to develop wireless silicon on its own or with partners such as Picochip and others, rather than buying technology. The firm, however, isn't averse to buying smaller technology pieces, especially if it can get talent on the cheap. (See Intel Buys More WLAN Tech?)
Qualcomm's rivals, however, could look to buy up assets in other areas of the wireless market. Broadcom especially may be threatened by Qualcomm's buyout of RF Micro Devices Inc. (Nasdaq: RFMD)'s Bluetooth business.
CIBC World Markets analysts Allan Mishan and Sam Dubinsky say in a research note that this transaction could prove to be "negative for Broadcom, particularly in the Bluetooth business where the company has been seeing some of the strongest revenue growth over the past two years." Broadcom could try to up the ante by skipping a generation and acquiring an ultra-wideband (UWB) startup, the Linely Group's Wheeler notes, since the technology is poised to become Bluetooth 2.
"If it's going to be the basis of next-generation Bluetooth technology that's something everyone in the cellular industry will have to address at some point," Wheeler says.
There's not a pressing need for rivals to address UWB yet, however, according to Wheeler. "UWB has got a long way to develop," he tells Unstrung.
— Dan Jones, Site Editor, Unstrung