The smartest thing about being in the wireless business is knowing when to get out of it. Cambridge Silicon Radio (CSR) must be wondering what it can do next.
When Intersil got out of WiFi chips it was the No.1 player in the business. CEO Rich Beyer reckoned WiFi chips would become commoditised, and that wireless LAN is not a defensible business area.
So he sold and put the proceeds into high performance analogue which is a defensible business, and where it's possible to stay ahead of the commoditisation process.
Now, CSR, also the No.1 player in its sector, Bluetooth, has the problem that Bluetooth is becoming commoditised.
Of course CSR has tried diversifying out of Bluetooth, but one diversification is WiFi, which is already commoditised, another is UWB, which is not yet a significant market, and the third is into cellular wireless, via its Ubinetics acquisition, and cellular wireless is a brutally competitive and very expensive business
Has CSR left it too late to re-establish itself in a profitable, growing and protectable niche?
In the last year, the company's stock market valuation has fallen by £800 million with the shares falling from £9 to under £3.50.
Commoditisation has always affected the chip industry and it is accelerated these days by everyone going to the foundries for processing and becoming undifferentiated, according to David Milne, founder of Wolfson Microelectronics.
"Products are commoditised, and the foundries are responsible for commoditising the products," says Milne, "the products in the digital world are not sufficiently differentiated to get a return on them."
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Comments (2)
Hi David
>"Cambridge Silicon Radio (CSR) must be wondering what it can do next"
CSR has already set out its strategy in considerable detail about what it IS doing next. And it has nothing to do with commoditisation.
Firstly, there's a significant difference between Wi-Fi and embedded Wi-Fi. The latter is not a commoditised market - the differentiators are power consumption, throughput, coexistence and software and in each case CSR offers compelling benefits that set it apart from competitive solutions by some considerable margin. UniFi offers 50% more data throughput than the nearest competitor, more than twice the throughput of the nearest competitor when coexisting with Bluetooth, the industry's lowest power consumption and the most complete host software to hide complexity and enable better performance. All these elements of the embedded Wi-Fi proposition are prerequisites. This IS a defensible business area & customers agree, voting with their orders.
Secondly, CSR has clearly set out its vision for the "wireless connectivity centre" with a compelling proposition that is not and will not embrace commoditisation in the mid-term. Bluetooth is now completely established as a key technology on smartphones and feature phones with a secure and increasing attach rate. This segment is growing and worth over a billion units per year between 2009 and 2012 according to ABI and IMS. CSR's unequivocal lead in this space provides a unique opportunity to develop differentiated propositions that have nothing to do with commoditisation. The company either has or has in development technologies that add to the rapidly emerging wireless connectivity centre including Bluetooth, Bluetooth low energy, Wi-Fi, GPS, FM, UWB, NFC and audio.
"Has CSR left it too late to re-establish itself in a profitable, growing and protectable niche?"
The TAM for CSR is profitable, growing & protectable. But it's not niche unless a $13.8bn opportunity qualifies as such.
Thanks
Alan
CSR
Posted by Alan | May 21, 2008 10:30 AM
Posted on May 21, 2008 10:30
Excellent news Alan. CSR shares must be an excellent buy. I see from the iSuppli figures for the wireless chip industry that CSR is now the tenth largest wireless chip supplier worldwide which is a huge achievement for a company less than ten years old. Best wishes, David
Posted by David Manners | May 21, 2008 10:49 AM
Posted on May 21, 2008 10:49