Preparing for the disruptive technologies of tomorrow

January/February 2005

By Ron Schneiderman

Things change. Usually for the better. In consumer electronics (CE), that usually means faster, smaller and cheaper. Now, however, things are changing faster than ever, raising consumer expectations and disrupting historic industry product development and market planning patterns.

Technology shifts, shorter life cycles and other unexpected requirements have become part of the industry`s new dynamics, but chipmakers and CE manufacturers are clearly under growing pressure to produce new and compelling products with new features and better performance and at lower production costs.

New technologies and applications have driven the semiconductor industry from the beginning, and market research firm Gartner says that`s not likely to change. But most of these have been incremental developments. Now, Gartner says that with the current pace of new product development and shorter life cycles for CE products, ``Disruptive technologies will have a significant and an unpredictable effect on the industry.``

Forget about five-year, even two-year business plans. ``The changing dynamics require new thinking,`` says David Bent, vice president of marketing for Sony Ericsson North America.

``The market is so dynamic,`` says Dr. Ali Khatibzadeh, vice president of wireless products at ANADIGICS, which designs and manufactures integrated circuits (ICs) for broadband and wireless markets, ``We have to be more flexible. We see new products coming to market every six months now. That means we have to adapt the way we define our products, the way we develop our products, and how we service our products in the market.``

Disruptive Convergence

The Internet comes immediately to mind when we think about disruptive technologies, but a more underlying, even subtle, example is the impact that convergence is having on the industry, especially in wireless.

``There is a lot of discussion around `convergence` in the industry,`` says Robert A. Rango, group vice president of Broadcom Corp.`s Mobile & Wireless Group. Broadcom`s response is a new chipset that offers consumers a cordless phone replacement with both Wi-Fi and data features, such as browsing, e-mail and instant messaging.

Sean Mahoney, executive vice president and general manager of the Intel Communications Group, believes that broadband wireless presents the most viable opportunity to improve communications for the one billion people who currently have Internet access and to newly connect the next five billion users. He says he has no problem with co-existing, even overlapping technologies, such as Wi-Fi, WiMAX, 3G and Ultra-Wideband (UWB), in forming a global infrastructure.

However, UWB is creating its own disruptive influence in the industry and on consumers. According to Unstrung Insider, the rapid emergence of UWB startups could make UWB potentially bigger than Wi-Fi and Bluetooth combined. Seen by some consumer electronic manufacturers as an ideal candidate for fast video transfer between peripheral devices, such as digital camcorders, TVs and PCs, and between set-top boxes and TV monitors, In-Stat expects UWB node/chipset shipments to grow more than 400 percent from 2005 to 2008.

Many market analysts believe it`s just a matter of time before mobile handsets put dedicated portable music players out of business.

With that kind of hype, several vendors are threatening to not wait for a formal technical standard for UWB. The Wi-Fi Alliance recently announced that it would not support so-called ``pre-standard`` wireless products by refusing to certify a Wi-Fi kit featuring 802.11 technologies until the standard has been ratified by the IEEE, which isn`t expected until November 2006. The WFA also threatened to withdraw Wi-Fi certification from products that claim to offer IEEE 802.11n-level features, fearing the sale of these products will confuse consumers who may purchase inoperable Wi-Fi products.

UWB supporters also took a hit from The Diffusion Group, a ``think tank`` of consumer technology analysts, which said it expects the next generation of Wi-Fi products to hit the market sooner than UWB, allowing Wi-Fi to leverage the larger embedded base of 802.11x products and their already widespread market awareness. ``The window of market entry for new wireless technologies is closing rapidly,`` says Predrag Filipovic, a Diffusion consulting analyst.

Global Access

While new technologies may have more heated competition, there are still plenty of global markets left for converging technologies, especially in areas where PCs and smart phones have yet to make a serious dent in the market.

Sony Network Services Europe, working with telecommunications operator TeliaSonera Finland, has responded to a rapidly increasing consumer demand for music entertainment on mobile phones by launching the latest version of StreamMan, with the ability to download tracks and listen to personal channels and playlists on a PC. It also allows users to access news and sports. Sony plans a major rollout of StreamMan to other countries throughout 2005.

Microsoft has been moving quietly in the same direction, aiming to get its audio and video software into mobile phones. Consumers soon will be able to play music they have saved in the Windows Media format on their PCs and their handsets. Motorola and Japan`s NEC already have Microsoft`s media decoders integrated into their 3G mobile handsets, but this still is a very small market and Microsoft wants to go global. Many market analysts believe it`s just a matter of time before mobile handsets put dedicated portable music players out of business.

Cell phone manufacturers already have put a huge dent in the digital camera and PDA markets—market researcher iSuppli is projecting that nearly half the cell phones sold this year will have built-in digital cameras—and now are integrating video, games and Wi-Fi into their products.

Next Big Technology

As technology advances and the market adapts, the list of potentially next big things just keeps growing:

1VoIP (voice-over Internet Protocol), or simply voice-over-the-Internet, is gaining as several companies, both mobile handset makers and carriers, have made it easier and cheaper to make VoIP calls.

2TV-over-phone-lines, or TV-over-Internet Protocol (TVIP), featuring on-demand programs and choose-your-own music video channels, rapidly is becoming available in Europe, and just about every U.S. phone company is developing its own TVIP offering.

3The next step for powering portables may be micro fuel cells. When MFCs run low, you simply refill them with fresh fuel (most of them use methanol), just like a cigarette lighter. Most MFCs are in the prototype stage and may not be widely available until 2006, but it should be worth the wait. One developer, MTI Micro Fuel Cells, expects to be able to boost the standby time for cell phones from three to 15 days.

4Smart antennas have been around for a long time, but are no longer an ``add-on`` feature. Driving this market is the diminishing spectrum availability and the need for embedded antennas that can support multiple wireless technologies, including cellular, GPS and wireless local area networks, including Wi-Fi.

Market leaders like Intel, Motia and ArrayComm already are heavily committed to well-financed development programs, but a market study by West Technology Research Solutions suggests there`s still plenty of room to play in this market. The research firm believes that the adoption of 3G, WiMAX and other emerging wireless local area networks could push shipments of smart antennas into the 155 million-unit range by 2008.

5Software-defined radio (SDR), already required in new radio acquisitions by the U.S. military, and soon to be integrated into radios used by public safety organizations, allows its operating frequencies and output power to be controlled through software. Eventually, SDR will be able to interoperate seamlessly across virtually any wireless standard, including home networking products. SDR-enabled cell phones also could accept over-the-air software fixes and upgrades.

``Cell phones are an excellent example of where SDR would be applicable, given the many standards for voice and data, the different bands and wireless ancillaries,`` says Scott Weldner, vice president for product management at The Titan Corp., which recently introduced a family of SDR-based portable multiband communications systems for the military.

``Interest in SDR is mushrooming,`` says Mark Cummings, managing general partner of eNVIA Technology Partners, a venture capital firm, and chairman of the board of the SDR Forum, which is currently studying opportunities for SDR in commercial and CE products. He says several major consumer electronics and semiconductor companies, including Intel, Samsung and Xilinx, already are developing products with SDR processing elements. The European Union has formed its own SDR group, called End-To-End Reconfigurability (E2R), whose members include Nokia, Ericsson, Mitsubishi Europe, Panasonic Europe, Motorola Europe, NTT Europe, France Telecom and several university research groups.

6And start thinking small. Very small. Nanotechnology has the potential to become one of the most disruptive technologies in years, but research in this area could lead to molecular-size chips with significantly more functionality and lower power consumption than is possible in any of today`s consumer electronic products.

Intel, Motorola and many other semiconductor companies already have created their own nano research projects, or have invested in other research programs. The U.S. Congress last year increased funding for nanotechnology research to $3.7 billion over a four year period. The European Union and Japan also are investing heavily in this technology, even though real applications may be years off.

Which technology or disruptive innovation will win out? Intel`s Mahoney argues that, ``It`s not a case of one technology becoming universal, or one technology replacing another…The technologies will co-exist, creating more robust solutions that will enable a lot of new and exciting possibilities.`` Technology will change, but chipmakers and CE manufacturers are ready to meet the challenge.