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Qualcomm Buys Airgo, RFMD Assets

Qualcomm Inc. (Nasdaq: QCOM) says that it will buy Airgo Networks Inc. -- as well as the Bluetooth assets of RF Micro Devices Inc. (Nasdaq: RFMD) -- in a move that instantly gives the company, which helped pioneer the CDMA networking protocol, a major presence in the market for the newest WiFi technology.

Qualcomm hasn't revealed how much it will pay for Airgo. The startup first introduced WiFi chipsets based on MIMO (multiple input, multiple output) antenna technology, which is the basis of 802.11n WLAN, in 2003. MIMO "smart antenna" technology uses multiple antennas on the client device and -- often -- the access point to increase the speed and capacity of an 802.11 wireless link to over 108 Mbit/s. (See Airgoooooooooooo! .)

Airgo has been an early leader in this market. Initial sales in the so-called "pre-802.11n" have generally been in the consumer market with SOHO routers and WLAN cards being top sellers. (See Airgo Hits Million Mark and Enterprise WLAN Market Up 19%.) Qualcomm says it will continue to support these products and also bring the technology into its newer mobile silicon, such as its recently announced "Snapdragon" wireless multimedia chipsets (See Powering Up 3G.)

Additionally, Airgo has taken an active role in the long-running efforts to deliver an Institute of Electrical and Electronics Engineers Inc. (IEEE) 802.11n specification, an effort dogged by infighting between the multiple vendors involved. Qualcomm is also involved with the 802.11n spec work, so it's unclear if this acquisition will speed up the ratification. (See Dot-N Delayed Again.)

The Wi-Fi Alliance recently stepped in to foster interoperability between "pre-n" WLAN products and alleviate the early problems. Airgo and Qualcomm have used the Wi-Fi Alliance's interoperability specification to introduce an 802.11 "draft 2.0-compliant" chipset. The AGN400 chipset is currently sampling and will be publicly demonstrated in January 2007 at the Consumer Electronics Show in Las Vegas and be commercially available shortly thereafter. (See WiFi's High-Speed Compromise.)

Meanwhile, Qualcomm has acquired the Bluetooth assets of RFMD for $39 million. The buyout will give Qualcomm the technology to integrate Bluetooth into its own chipsets. The firm has previously worked with Broadcom Corp. (Nasdaq: BRCM) and Ericsson AB (Nasdaq: ERIC) on Bluetooth.

Both of these acquisitions give Qualcomm extra wireless technologies under one roof and should allow it to build more connectivity options into a single chip. Integration has become more important in the mobile chipset market as smartphones and other devices become increasingly powerful.

The Airgo acquisition is expected to close by January 2007.

— Dan Jones, Site Editor, Unstrung

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materialgirl 12/5/2012 | 3:33:21 AM
re: Qualcomm Buys Airgo, RFMD Assets QCOM moving into WiFi presents an interesting strategic dilemma. Are they trying to co-opt the open WiFi interface into some proprietary solution, or are they placing a bet on the demise of their proprietary CDMA stronghold?
Gabriel Brown 12/5/2012 | 3:33:17 AM
re: Qualcomm Buys Airgo, RFMD Assets It is interesting for lots of reasons.

Airgo has good products and, apparently, important intellectual property.

But there doesnGÇÖt appear to be any dilemma GÇô just recognition that many types of connectivity is likely a good thing.
materialgirl 12/5/2012 | 3:33:13 AM
re: Qualcomm Buys Airgo, RFMD Assets Dear Gabriel:
That said, WiFi represents a threat to CDMA. By admitting it is good enough to buy, QCOM undercuts their CDMA-everywhere story. Have they not been out there bashing WiFi (or is it WiMax)?

Buying WiFi technology after dismissing it does not help their credibility. Additionally, the better WiFi gets, the faster it cuts into their CDMA business. This is just a significant change of tactics, which makes me wonder what is going on behind the scenes.
fredfrenzy 12/5/2012 | 3:33:13 AM
re: Qualcomm Buys Airgo, RFMD Assets Much better to be a wireless "arms merchant" then a CDMA bigot.

Their customers are very interested in wifi...

bf
fgoldstein 12/5/2012 | 3:33:09 AM
re: Qualcomm Buys Airgo, RFMD Assets Airgo's WiFi a threat to CDMA? What a laugh!

CDMA is exclusively a licensed technology, designed for decent range and efficient mobility. It has no place in the mass-market WLAN space.

Airgo's WiFi chips are aimed at the home/office indoor application. Outdoor WiFi is still unproven; it's a lot more talk than action.

Airgo's MIMO chips do work, providing high speeds over short distances (like one room away). But even then, it's no panacaea. Their drivers truly, deeply suck. I mean bigtime suck. I have Belkin's pre-N card, which is Airgo, and whose drivers say Airgo on them. They cause my laptop to crash hard, blue screen, fairly often, a style of crash that tends to damage open files and applications and sometimes leave the OS itself corrupted. (The old but slow Orinoco was rock-stable.) Will Qualcomm fix this? It'd be nice, but I'm not optimistic.
DanJones 12/5/2012 | 3:33:08 AM
re: Qualcomm Buys Airgo, RFMD Assets I think they see OFDM technology as the 'new' CDMA -- a potentially huge source of licensing revenue. That tech, and the need to integrate more and more connectivity onto chipset, is what has driven the Airgo and Flarion aquisitions.

Qualcomm appears to be anti-WiMax at the moment but I wonder if that might change over time. They were anti-WiFi for ages. Picking up WiMax IPR would give them an OFDM hat-trick.

DJ
materialgirl 12/5/2012 | 3:33:07 AM
re: Qualcomm Buys Airgo, RFMD Assets Dear fgoldstein:
You are seeing an example of the transition type described in "The Innovator's Dilemma", where a new "crummy" technology adopted by a fringe element grows over time to replace the old, over-featured one. As WiFi usage grows, do not under-estimate what new uses to which it will be put, such as intra-campus voice or SMS, that grow to replace the old mobile voice business. Do not forget, WiFi need not replace CDMA 100% to render it unprofitable.

It just seems to me that QCOM's weakening stance against these WiFi or WiMax technologies spells bigger changes afoot.
DanJones 12/5/2012 | 3:33:07 AM
re: Qualcomm Buys Airgo, RFMD Assets They just bought out the 3rd gen chipset, I'll see what the word is on that. The thing is, even with those problems, most people agreed that Airgo's MIMO was better than the competition. They were a logical choice to buy.
Gabriel Brown 12/5/2012 | 3:33:03 AM
re: Qualcomm Buys Airgo, RFMD Assets WiFi need not replace CDMA 100% to render it unprofitable

This is putting it a bit strongly, but headed in the right direction.

Clearly, WLAN has impacted 3G business (how many more 3G data cards would be sold if laptops didnGÇÖt have WiFi?).

The cellular industry anticipates this threat will increase and so it has embraced WiFi and broadband as IP access mechanisms, despite what it may say in public.

But fgoldstein is right in many ways. ItGÇÖs going to take a while before WiFi is really useable in mass-market mobile phones. And from a technology perspective, the new 3G networks and services are really impressive.

Probably a bigger short-term threat to cellular operator profitability is competition between carriers, and the fact that people seem to prefer spending GÇÿspareGÇÖ money on consumer electronics, broadband, and home entertainment (which do tie in nicely with WiFi), than on cell phone services.
materialgirl 12/5/2012 | 3:33:01 AM
re: Qualcomm Buys Airgo, RFMD Assets Dear Gabriel:
As a financial type, I would just observe that the profitability ice these cellular guys are walking on is thinner than you may think. Keep the 2000 bubble burst in long-distance transit in mind.

The business plans these guys are spending big bucks to support may not be accurate. The profit projections may be too high. Just as in long-distance weapons trajectories, a small error can yield big misses over time.

The question is, how much lost "services" business, on top of declining voice ARPUs, will it take to cause a market melt-down of the sorts we have just gone through in transit.
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