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

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Embedded Wireless Consumer Devices – Catch the Wave !!

June 25, 2009

Embedded wireless broadband is a tremendous growth opportunity in the consumer electronics (CE) space such as laptops, netbooks, digital cameras, e-book readers, gaming, portable navigation, and other devices.

Embedded wireless provides network operators the opportunity of maximizing revenues and profits via the efficient use of network capacity and spectrum assets, and potential revenue sharing from applications and services. At the same time, device OEMs can innovate to open up vast possibilities in the consumer electronics space in ways never imagined before.

More importantly, network operators now have an opportunity to leverage their core competencies and transform themselves from staid bandwidth providers to solutions/managed service providers who help companies leverage embedded wireless to foster innovation & differentiation in new markets, promote new business models, and enhance revenue opportunities ….much like IBM transformed itself from a pure hardware and software player to a solutions and managed services provider.

But many hurdles have to be overcome before embedded wireless can be mainstream in consumer electronic devices. New players, new devices, and new market dynamics will call for creative business models different from the traditional handset business model.  The challenges may be categorized into seven key areas.

Key Challenges for Embedded Wireless Consumer Devices

Key Challenges for Embedded Wireless Consumer Devices

1. Lower entry barriers for OEMs

  • Easy wireless integration by OEM with minimal BoM (bill-of-materials) impact
  • Easy device provisionability with minimal burden on OEM
  • Easy device upgradeability
  • Easy integration into IT infrastructure and back office systems
  • Expedient Testing & Certification – Simplified and efficient

2. Win-win business model between OEMs and Operators

  • Clear OEM/Operator business strategy
  • Clearly identified target market(s) and ROI
  • Clearly understood impact on current business model
  • What are the strategic competitive advantages?

3. Device design targeted for well-defined user experience

  • Specific device type (Data-only versus Voice+Data) targeted at well defined application/user experience at optimal cost
  • Ergonomic accessibility features
  • Features for enhanced user experience
  • Content, multimedia & graphics, page length, and download times optimized for specific device and user experience
  • Upgradeability – Device renewability, OTA upgradeability, Content portability

4. Application, Content, and VAS developer ecosystem

  • Win-Win business model between Application/VAS providers and OEMs
  • Developer-friendly environment incl. a standardized ‘open’ application development platform, and easy access to SDK, device simulator, and toolkits
  • A centralized App store (either through OEM or through the Operator) to distribute the applications
  • Expedient Application Testing & Certification

5. Efficient device deployment

  • Out-of-the-box flexible provisionability – Pre-provisioned, or simple 1-step on-line post-provisioning
  • An ‘Open network access’ model where any device can operate on any network.
  • Traditional distribution channels must be empowered to distribute easily

6. Simplified business model for consumers

  • Straightforward, simple, and compelling value proposition – centered on enhanced user experience and customer ownership
  • Targeted at lower total COO
  • Customized business model (versus one-size fits all)

7. Compelling end-user experience

  • Enhanced convenience, mobility, productivity, and user experience.
  • Built on familiar usage patterns
  • Easy out-of-box experience (Learn, Pre-loaded applications & content, provisioning/activation)
  • Enhanced operational (normal) usability experience – Overall ease of operation, accessibility, performance & responsiveness, battery life, reliability, peripheral connectivity to other devices
  • Superior aftermarket service – Customer service, Accessories
  • Availability of content, where applicable

Embedded wireless heralds a paradigm shift and a new revolution in consumer electronics.The new embedded wireless device world will provide opportunities for all players in the mobile ecosystem – Operators, Device OEMs, Application/VAS developers, System Integrators, Module providers, and Chipset providers.

2009 is the Year for Embedded Wireless. Beyond consumer devices, embedded wireless is finding its way into new domains – M2M communications, smart grid or smart meter technologies (energy conservation), and wireless medical devices (remote health monitoring).

This is a new frontier and it calls for new ideas and fresh perspectives. Many Operators (AT&T, Sprint, T-Mobile, etc.),  OEMs, and consumer electronics companies have created separate divisions, un-shackled from their old ways of doing business, to address this emerging segment.

The opportunity is NOW! Are you ready?

★★★ There’s more info & insight on how you can penetrate the embedded wireless space at http://emblazeworld.com/ in the Resources section (see whitepapers)