Smartphones are poised to be the fastest growing handset segment in the coming years, rising from 14% of global handset shipments in 2008 (Ref 1) to a projected 32% in 2010 (Ref 2).
Further, smartphones command higher ASPs (average selling price) on the order of US$350 (2008) signaling higher revenue and profitability potential for handset OEMs. This has heightened the intensity of competition among handset makers.
Historically, handsets have evolved more as ‘fat modems’ where application processing and modem communication were all handled on the same chip. On the other hand, application centric devices such as PCs, gaming devices etc. evolved as standalone devices based on discrete applications processors. Connectivity was added on via discrete connectivity modules.
While data speed does impact user experience, application and related services offer many dimensions to differentiate personalization and user experience, thus leading to higher ARPU over voice centric services.
The two worlds are set to collide to create converged devices with vast possibilities (Refs 3 and 4). It also means non-traditional wireless players whose core competency is more on the applications side will enter the fray. For example, Intel is pushing its application processor, Atom, from Netbooks down into Smartphones (Ref. 3). On the other hand, Qualcomm has just announced it is targeting its integrated application and baseband processor, Snapdragon, at Smartbooks (Ref 4).
CRITICAL QUESTION – DISCRETE vs. INTEGRATED PROCESSORS?
The handset designer is now confronted with a daunting choice – the use of a discrete applications processor in conjunction with a discrete baseband processor versus an integrated SoC that combines an applications processor with a baseband processor in a single chip.
Product management and handset designers need to evaluate the trade-offs in reaching an appropriate decision. Here are some key trade-offs that influence the decision process:
Neither is a silver bullet.
Both have a rightful place and will jostle with each other to dominate this growing segment.
The choice however can have significant implications on product and business competitiveness via such dimensions as system cost, time-to-market, power consumption, flexibility to spin out devices for different communication standards, performance maximization, harmonization of user experience, device form factor (via PCB size & component count) and component supply chain management.
Ref. 1: ABI Research – Smartphone and OS markets (Q1-2008)
Ref. 2: Qualcomm- Evolving Wireless Services (Jan, 2009)
Ref. 3: Sharp unwraps ‘world first’ Intel Atom phone
Ref. 4: Qualcomm Enters Intel Territory
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