Sony Has Problems>
IC makers face CDMA obstacles; Sony shelves handset
By Mark LaPedus
Electronic Buyers' News
(02/12/99, 2:45 p.m. EDT)
While many OEMs are riding the digital cellular wave, others are being stymied in the business due to some
problems in developing key parts.
Both Nokia and Motorola Inc. for months have struggled to develop in-house baseband chipsets for their CDMA
handsets, while Japan's Sony Corp. this week dropped a bomb by shelving a new CDMA cellular-phone line
based on its first internally developed controller chip.
Sony was originally slated to announce the CM-ZS300 handset line as well as the chipset at this week's Wireless
'99 trade show, but it scrapped the cellular phone at the last minute after Sony's new management team determined
that the product lacked certain features. The company also had run an advertising campaign in various trade
newspapers this week to promote the handset, but couldn't pull the ads in time.
Sony officials confirmed that this snafu will delay the introduction of its new chipset, possibly until mid-1999 or
later.
The chipset is not targeted at the merchant market, but is still a critical part of Sony's overall strategy to reduce
costs and lessen its dependence on its sole source for these critical components-San Diego-based Qualcomm Inc.,
its archrival in the CDMA cellular-phone business.
“The handset has been scrapped, but we'll continue to develop our chipset,” said Mike van der Wallen, the new
vice president of marketing and international business for the Personal Mobile Communications Division of Sony
Electronics Inc., San Diego, in an interview at Wireless '99.
He did not elaborate on either the timetable for the device or its specifications, but some speculate that the product
is based on an ARM7 RISC MPU from Advanced RISC Machines Ltd. The chipset, sometimes called a
baseband controller, performs analog-to-digital conversion, voice processing, and other key functions.
Most industry watchers were unaware of Sony's announcement, but were not surprised by the company's action.
“Everybody's late in the [CDMA] business-it's a tough technology to develop,” said Matthew Hoffman, an analyst
with Dataquest Inc., San Jose.
Others, especially in the chipset arena, agreed. “Every OEM says they're working on a CDMA chipset, but it's not
easy to develop-that's opening the door for us,” said Thomas Farmer, vice president of sales and marketing for
PrairieComm Inc., an Arlington Heights, Ill.-based maker of chipsets for digital cellular applications.
PrairieComm's competitors in the CDMA chipset market include DSP Communications Inc., LSI Logic Corp.,
and VLSI Technology Inc.
For now, the top-tier CDMA OEMs-Nokia and Motorola-are intent on developing their own devices for their
handsets.
The stakes are high. Production of CDMA handsets will grow from just 8.7 million units in 1997 to 69 million units
by 2002, according to Dataquest.
However, it's no secret that Motorola is lagging behind in the digital cellular arena, causing it to lose significant
market share to Finland's Nokia last year. At present, Schaumburg, Ill.-based Motorola is shipping limited
quantities of its CDMA and TDMA handsets, both of which use a proprietary chipset.
Last year, Nokia also ran into some delays in shipping its CDMA handsets incorporating its own chipset, but the
company was able to increase its market share thanks to strong demand for TDMA products.
Second-tier handset suppliers such as LG Semicon, Samsung, and Sony also saw their respective shares of the
market grow last year, but these companies continue to procure chipsets from Qualcomm.
Part of Sony's future success in wireless products will depend on its ability to develop key components, according
to van der Wallen. Already one of the world's largest suppliers of lithium-ion batteries, Sony also makes RF
devices, SRAM chips, and other wireless-product components.
Another key is the baseband controller. “Our chipset is designed to give us more control over our destiny and
product line,” van der Wallen said. The device “will be deployed in a handset for the Japanese market very soon,”
he added, without elaborating.
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