Intel v. QUALCOMM
This article was written 1½ months before Qualcomm announced the acquisition of Flarion and its F-OFDM technology.
>> Intel Against Qualcomm: Clash Of The Titans
Robert Syputa
Senior Analyst
Maravedis Inc.
June 27, 2005
wimaxtrends.com
For Intel, WiMAX mobile (WiMAXm) is the road map to the future. The company continues to be the world’s largest semiconductor company, enjoying sales of over $35 billion and among the highest margins of any large cap company. Intel has leading semiconductor design and manufacturing process capabilities and capacity that make it the force to be reckoned with in IT/networking and communications industries. However, the fabled dictum of “Moore’s Law”, in which semiconductor capabilities double about every 12 to18 months while costs are driven down, has shown signs of having reached the limits of physics. Device geometries are approaching molecular and atomic scale limitations. In practical terms this has led Intel to reduce goals for achieving higher and higher clock speeds as a way to maintain the trend in performance increases. Instead, the company has embarked on multi-processor, system bus and system scale design and process advances to keep long term trends on track. To achieve increased clock rates and enable on-chip analog circuits and power components, Intel is resorting to the use of novel device structures, and the use of higher isolation processes including silicon on insulator or SoI. These advanced semiconductor processes are currently being used in the latest versions of Pentium 32 and 64 bit processors.
Mastery of PC/server processor developments and markets has served Intel well over the past three decades but the company has not faired nearly as well in dominance of the mobile wireless. Intel did not architect the rise of any major cellular technology. And despite Intel’s huge patent portfolios, they have little vested in the success of CDMA, the leading technology for 3G. Embedded device processor and FLASH memory sales have benefited from Intel’s manufacturing might and leading edge process technologies to give them a leadership position in commodity wireless product areas. But overall, Intel’s primary area of market dominance remains PC & server processors; a maturing field.
As networking has shifted the emphasis of IT from computing to data networking communications, the nature of the platform architecture which Intel dominates has shifted along with it. Now the computing and networking platform architecture is making an even more dramatic shift: from an emphasis on the wired/tethered network to a more open, untethered wireless broadband network environment. This is witnessed by the rapid rise in WiFi for both consumer and corporate network applications. Major companies such as Boeing have announced the goal to shift the majority of PCs, servers and portable devices to wireless broadband networks. And because this shift is occurring on the open, internationally developed IEEE 802.11 and 802.16 standards, it is without a patent hegemony similar to Qualcomm’s control over the cellular CDMA field. Intel can enter the open environment to compete for SoC IC sales used in devices which will be increasingly broadband data and computationally centric. WiMAXm, ‘wireless mobile Ethernet’, portends development of product markets similar to those Intel has historically dominated.
Intel needs WiMAX to succeed because it counters the control on markets by Qualcomm that will drive lifestyle enhancements and productivity gains over the coming decades. This is part of the reason why statements from Intel’s CEO and soon COB, Craig Barrett recently declared that wireless broadband was an ‘half assed’ effort. What did Barrett mean by this? Probably just the obvious: that wireless broadband is set to play a more significant role in the organization of overall communications and IT architectures and that the cellular voice inspired approach to WBB is a half-baked, narrowly focused solution to the overall promise of the field of development. This appears obvious at least in the eyes of Intel. Qualcomm has done a good job developing complex wireless cellular technologies but a relatively poor job in broadening out the capability or creating an open playing field needed for the next century of converged industry development.
Intel can and must seize on the emerging standards efforts and digital technologies because these nicely fit into their key strengths in design and manufacturing. The Wireless Broadband Revolution picks up where the PC and Networking Revolution of the last two+ decades is beginning to stall. WiMAX and converged wireless and networking provide the flexibility, lower costs and mobility that will drive much of the productivity enhancements and entertainment value that will bring value in the future. And the converging fields need Intel and a few other major players to consolidate IP and help orchestrate compatibility. Wireless will become the a major aspect of the networking, media and computing environment that augments and supersedes that of the wired networking and client-server processing centric model. Because it has the size, market leadership, advanced semiconductor processes, and manufacturing capacities to develop WiMAX/WBB into the next great frontier for Moore’s Law to once again be proven valid.
Qualcomm Does Not Stand Still
Qualcomm and aligned companies in the ‘CDMA/3GPP cellular camp’ won’t simply sit on their hands and concede market share from what they see as their world of dominance. Even though the converged vision of WBB centric IT/communications field incorporates the two realms, cellular is the largest in terms of sheer numbers of users and sales growth. And in terms of impact on ‘the average person’s life’, who can argue against how important cellular wireless communications has become? And the impact on developing regions of the world is even more profound than in areas where cellular is but one among multiple choices of communications that greases the wheels of personal relationships and commerce. Even though the effects of globally available, wireless broadband communications might be expected to stir debate, cellular wireless can’t be doubted as a major social, political, and economic catalyst of the past two decades.
Qualcomm has played a significant role in the proliferation of cellular wireless. But increasingly the question should be asked, “At what price?” Qualcomm has developed a dominant patent portfolio that is licensed to anyone wishing to compete in mainstream 3GPP developments. And it has done so based on a set of technologies that Intel and others in the WiMAX effort can argue is not well suited for ‘the next and next after’ generations of WBB starting with 3.5G and 4G. Research conducted by leading cellular companies points to the advantage of shifting to OFDM for ‘beyond 3rd generation’ or B3G mobile systems. Advantages can be seen compared to CDMA as newer technologies, such as MIMO and adaptive/smart antenna systems are incorporated into system designs. Even Qualcomm’s own CEO and similar leaders in the 3GPP effort admit that to achieve 4G capabilities, 3GPP will likely shift to OFDM technologies for the down link while, perhaps, maintaining the use of CDMA for the up link connection. Maravedis’ own research concludes that 3GPP is on a development road map that will evolve the field towards a similar set of technologies as is being adopted by WiMAXm/802.16e.
Qualcomm has developed MediaFlow, an optimized end-to-end multi-media system and has committed $800 million towards building out a nationwide network in the 700 MHz spectrum. This places Qualcomm at the forefront of companies poised to deliver a richer media experience to users of handheld devices and portable computers [see qualcomm.com ]. The MediaFlow network, scheduled to become available in 2006, expands on Qualcomm’s role as a licensor of technology and supplier of chipsets for cellular handsets. This puts Qualcomm into the systems and services business: the company says that MediaFlow is not intended to compete with service providers but to offer additional revenue. MediaFlow should prove to be a useful in develop multi-media over broadband wireless while positioning their entry as an operator as a limited. However the company positions MediaFlow, it clearly shows an element of the convergence between cellular and media empires. And this highlights a major aspect of the looming battle.
Wireless Mobile Takes Over
More is at stake than just loss of growth markets for Qualcomm or lower growth and market maturity for Intel: The converged multi-media communications and computing networks and device markets will largely determine growth of electronics in general and determine competitiveness in related fields. Intel needs to be to fresh challenges to keep the engines of development stoked. If they are not pressing the edges of the WBB frontier, they face losing relevance as the driver of productivity for pivotal industries. Qualcomm needs to look beyond the cellular handset product focus and towards media and service platforms. PCs can no longer be counted on as the future growth engine for Intel. And cellular products are becoming more complex and diverse pushing Qualcomm to take on a broader role. In other words, both companies must move into each other’s markets as wireless converges with broadband networking and computer fields.
Intel has become the largest supplier of WiFi devices while growth in wireless enabled laptops has helped to fuel sales. And as a demonstration of why the company is so excited about WiMAX and the prospects for ‘always best connected’ seamless roaming, the company recently showed off new multi-mode 802.11a/b/g CMOS chip [see wireless.sys-con.com ].
Delivering a new WiFi chip hardly seems exciting, the pricing is highly competitive. But what is interesting is that the parts incorporated software defined radio and on-chip amplifiers to deliver a level of integration and flexibility not yet seen. Even more surprising is that the part were manufactured using the same mainstream silicon on insulator process technologies used for the latest Pentium 32 and 64 bit processors. The company says will also be capable of also integrating upcoming WiMAXm and the 802.11n and cellular radios and embedding radios into mainstream Centrino processors. We think that this signals the initiation of a ‘new age of Moore’s Law’ which will witness dramatic improvements in wireless performance enabled by multi-mode, multi-radio, multi-spectrum, smart radio products. Intel is preparing to leverage their greatest assets in the emerging field of wireless broadband.
What this all means is the ‘fight of the century’ between the cellular camp heralded by Qualcomm and the IT/networking and emerging open field of WBB/WiMAX heralded by Intel is about to unfold.
Maravedis Research envisions this clash of titans won’t be resolved in just a few rounds or in a matter of a few short years. This is a global clash of historical proportions that will be played out over the course of the next 10-20+ years. The first round is set to begin with the ringing of the bell in late 2006 for the introduction of WiMAX mobile systems. More analysis on long term competitive trends can be found in Maravedis landmark report ““WiMAX and Broadband Wireless (Sub-11Ghz) Worldwide Market Analysis and Trends 2005-2010” 3rd Edition” April 2005.
In coming months, Maravedis Research will delve into several aspects of this ensuing battle of the titans and development of following industries. We expect interesting times ahead. <<
About the Author: Robert Syputa, BSEE, MBA, Senior Analyst with Maravedis Inc, has over 26 years experience in the broad field of electronics and six years experience as a telecommunications industry analyst and consultant, particularly in the merging fields of WBB and related technologies and businesses. Several years ago he developed an interest in emerging wireless communications fields including cellular and 802.11/802.16 standards for WLAN and WMAN systems. He developed a broad understanding from bottom's up analysis of the technologies, companies and business trends shaping the developed and emerging sectors of the converging industry. He has consulted with both startup wireless companies and leaders in the merging WiMAX/WMAN field and with private investment groups and large telecommunications industry hedge funds on products, business strategies, company image and market positioning. -- Copyright © 2005 Maravedis Inc. <<
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