Microsoft and Google put mobile computing within ARM’s reach

July 28, 2010

SUMMARY:

Microsoft (NASDAQ:MSFT) has realized that a strong play on the ARM platform is necessary moving forward especially in perspective of the competitive threat of the Google+ARM platform that has manifested strongly in smartphones and tablet devices.

Microsoft and ARM announced a new architecture licensing agreement that underscores the importance of ARM’s architecture on the Windows roadmap and perhaps heralds the game-changing arrival of the era of Windows+ARM based mobile computing and gaming platforms.

ANALYSIS

The convergence between mobile devices and classic desktop/laptop computing devices is resulting in new opportunities in a host of portable consumer devices such as E-readers, Tablets, gaming, media phones, and navigation devices.

While it indulged in the ARM space for smartphones where it failed to get sufficient traction, Microsoft did not see a compelling need to pursue an alternate platform for mobile computing since the WINTEL (Windows + Intel (NASDAQ:INTC)) platform had a stronghold in this sector.

Many prominent portable consumer devices however have now embraced ARM as the platform for such emerging devices. Notable examples include:

ARM’s Cortex A8 and Cortex A9 (with multi-core processing capabilities) platforms at ≥1GHz are cost competitive and more power efficient, and offer a compelling alternative to Intel’s processors for these emerging portable consumer device platforms.

Google (NASDAQ:GOOG), who has challenged Microsoft with new paradigms and business models, has sided with the ARM platform for its thrust into smartphones with its Android OS. This ARM+Android mobile platform has gained momentum among smartphone OEMs incl. Motorola (NYSE:MOT), Samsung, Sony Ericsson, HTC (TPE:2498), LGE, Dell, Acer, etc. that has translated into significant market share gain within smartphones.

Google is aggressively mounting a similar campaign to address the world of tablets, smartbooks, and netbooks leveraging the ARM hardware platform via its Android OS and the Chrome OS platforms.

Google’s royalty-free OS model combined with the cost and power advantage of high-performance ARM processors makes a potent combination that threatens the WINTEL alliance from extending its dominance into the smartbook/tablet/e-reader space. For example,  notable players from the PC camp including Dell, Acer, Lenovo, Asus, Samsung, LGE etc. have chosen to introduce Android+ARM based tablets.

Most of these emerging consumer computing devices are ‘communication devices’ that have built in modems. As these devices become mass market plays, cost and power reduction will increasingly drive integrated (applications + modem) processors where ARM-based players Qualcomm (NASDAQ:QCOM), ST-Ericsson, Marvell, Renesas, etc. are well-positioned relative to X86 players (Intel, AMD (NYSE:AMD), VIA).

Microsoft has thus realized that a strong play on the ARM platform is necessary moving forward.

This announcement underscores the importance of ARM’s architecture on the Windows roadmap and perhaps heralds the game-changing arrival of the era of Windows+ARM based mobile computing and gaming devices. The proactive engagement will enable Microsoft to stay in sync with ARM’s roadmap and optimize their leading-edge Windows smartphone and Windows embedded OS platforms with corresponding leading-edge ARM-based products.

One thing is clear. ARM is the winner as Google, Microsoft, Nokia, Samsung, Qualcomm etc. are doing the heavy lifting, and even Apple (with its ARM based A4 chip that is the foundation of its new iPad and iPhone 4) is doing its share.

Note: There’s more valuable insight on smartphones and new wireless frontiers at http://emblazeworld.com/ in the Resources section

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Renesas promises a renaissance in the mobile space

July 25, 2010

 
With its $200M purchase of Nokia’s wireless modem business, Renesas has made a chess move that is clearly challenging market leader Qualcomm (NASDAQ:QCOM) in the 3G space, as the 3G handset market rapidly grows from ~30% in 2009 (out of 1.15Bu)  to a projected 55% (out of 1.5Bu) in 2010. The more immediate threat is perhaps to current Nokia suppliers ST-Ericsson, Broadcom (NASDAQ:BRCM), TI, and Infineon.

The deal, expected to close in the fourth quarter of 2010, is for Nokia’s wireless modem technologies for LTE, HSPA+ and GSM standards. As part of the deal, Nokia will transfer around 1,100 R&D employees to Renesas.

This daring move, especially in the face of recent exits by high profile chipset players from the wireless modem business, affirms Renesas’s commitment to being a full wireless systems platform provider.

Renesas Electronics, founded only recently (April-2010) from the merger of Renesas Technology and NEC Electronics (TYO:6723), is expected to become the world’s third largest semiconductor supplier based on combined revenue. Its scale and breadth of embedded products provide the foundation to be a formidable global wireless platform provider.

Here are some implications of the announced deal.


FOR NOKIA
  • Unshackles Nokia and removes internal barriers to sign up with any standard chipset offering
  • Reduces R&D costs and allows Nokia to refocus R&D on core value-added Apps/Services and User Interface/User Experience related activities
  • Strategic alliance that gives access to advanced modem technologies for HSPA+/LTE
  • Increases supplier base for wireless modems

FOR RENESAS
  • Gives immediate access to robust, proven technology for a relatively modest price, that would otherwise have been prohibitively expensive and long-drawn to build from ground up.
  • Provides access to critical IP from Nokia, strengthening its competitive positioning
  • Positions Renesas as one of few strong players to offer a complete mobile broadband platform – Application Processors, Basebands, Integrated SoCs, Power Management, RF Transceivers, and Power Amplifiers.
  • Access to a key customer, and potentially rapid ramp up in volumes globally beyond their traditional Japanese market.
  • Positions Renesas as a key alternate source for Nokia’s high-tier smartphone platform awarded to ST-Ericcson (U8500).
  • Positions Renesas for a significant play in a broad array of wireless embedded device markets in smartphones and beyond (ereaders, gaming, personal navigation, smartbooks, tablets, netbooks, etc.)

FOR OTHER WIRELESS CHIPSET SUPPLIERS
  • It lowers entry barriers to QCOM, BRCM, IFX within Nokia
  • It brings in a strong 3G modem chipset supplier, threatening the dominance and growth of currrent leaders, Qualcomm and ST-Ericsson
  • With its SH-Mobile S-series applications processor, Reneasas increases competitive pressure in the smartphone processor domain, and especially in the integrated applications+baseband SoC space (where it has considerable experience with the SH Mobile G-series) that includes Qualcomm, ST-Ericsson, Marvell, and Broadcom.
  • It ups the ante for standalone Applications processor players to build/acquire modem technology and/or look aggressively at new embedded device markets beyond smartphones.

In summary, Renesas Electronics promises a “renaissance” in the mobile platform space, that is sure to have ripple effects in the wireless semiconductor space.

★★★ There’s more valuable insight on smartphones and new wireless frontiers at http://emblazeworld.com/ in the Resources section