mannerisms

Ruminations on the electronics industry from David Manners, Senior Components Editor on Electronics Weekly.

Ericsson And Slim Modems Don’t Fit, say Analysts.

‘We feel that the slim modem business is not a long-term fit for Ericsson’, says Strategy Analytics.

Yesterday Ericsson said it would take over the slim modem business of ST-Ericsson and run it as a separate unit.

Ericsson said the company wants to be the number three player in the slim modem market, and the company has given a 18-24 month time frame to achieve that.

Sttrategy Analytics points out that, to achieve the number three position, Ericsson would have to score iPhone or Galaxy S design-wins – because the market for slim modems is relatively limited outside of Apple and Samsung.

Ericsson could potentially pursue M2M, USB dongles, tablets and other non-handset markets as an opportunity to expand its slim modem business, but this would put it in direct competition with Intel and many small, innovative LTE baseband suppliers such as Sequans, Altair and GCT Semi.

Another possibility for Ericsson’s thin modem business, as suggested by Mike Bryant, is for Motorola/HTC/Nokia/Sony et al to club together to ensure an alternative to Qualcomm.

‘We were somewhat surprised by the lack of buyers for ST-Ericsson’s modem business given ST-Ericsson’s 4G LTE products, which are production-ready,’ says Strategy Analytics.

Tags: Intel, modem market, modems, motorola, samsung

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9 Comments

  1. WirelessMonitor
    April 04, 2013 13:41

    TI’s and Freescale’s decisions to exit the wireless chipset market were probably perfectly rational decisions considering that they basically lost their respective key customers; Motorola (FSL) and Nokia (TI). Whether Ericsson will succeed or not doing LTE multimode modems will definitely be interesting to follow. I suggest that the true potential is in the handset industry’s desire to have an alternative to QCOM. Their market share for LTE capable modems 2012 is really close to a monopoly. Some reports suggest that QCOM market share 2012 was >85%. Under normal market conditions any major customer would like to see that change.

  2. Bitter
    March 20, 2013 08:56

    In the ideal world E would later spin off the modem business, hire a guy like Warren East to head it, dump the elitist, arrogant, overeducated, overdebted and dull careerist drove, then make engineering a career path of its own so that the remaining übergeeks can live adequately of their prowess, perhaps make it a slightly more desirable profession in the process.
    Oh, yes, the products would fly off the shelves.
    Will this happen? No!
    Are the analysts right? Yes!

  3. David Manners
    March 20, 2013 07:25

    Yes indeed PM, I really agree with you sbout the alternatives to the duopoly particulsrly in regards to Motorola’s phones. An end to the duopoly would be healthy. And I agree whole- heartedly about ST’s curiously passive role in letting the whole ST-E thing slowly fall apart. Any normally active company would have got out and made some waves and banged some drums and created some energy around ST-E’s prospects and plans but the ST execs just stayed under the parapet. The Freescale thing was strange, I agree, they decided to exit handset SOCs, couldn’t find a buyer and then just dissolved the unit. And Yes one rather assumes the private equity owners just see a non- performing unit and tell the local management to ditch it. There’s an assumption that the landscape won’t change when we all know the landscape never stops changing.

  4. PM
    March 20, 2013 07:09

    I think the analysts are wrong and this Samsung/Apple duopoly will actually come to an end, as there are many many more competitive (and superior IMO) products now on the market from Sony/Motorola/HTC. ST-Ericsson have been unlucky in being in the game only during the period of an Apple/Samsung duopoly, as in any other more competitive circumstance they should have succeeded.
    Personally, I think ST has been a bit short sighted and never aggressive enough in the last few years (even NXP would have done a better job!). I think ST is also being rather short sighted now if it thinks that only vertical integration is inevitable. To me, the weak link in ST-Ericsson always seemed to be more from the ST side.
    I therefore could see Ericsson partnering with someone else. What about TI? It never really made sense to me what TI left the mobile SoC business. Back in the day many Sony Ericsson phones were TI and Ericsson Mobile Platforms designs, with ST being more if a Nokia customer than Sony Ericsson. It would indeed be in the interests of Sony/Motorola/HTC to have someone to keep Qualcomm under control. (and what on earth happened to Freescale? I suppose venture capitalist buyouts mean the end if any semiconductor company!)

  5. random_guy
    March 19, 2013 15:18

    If Ericsson decides to keeps the modem: he who controls the technology, controls the future. Just look at Nokia and what happened when it started outsourcing.

  6. ste
    March 19, 2013 12:26

    I don’t give much for what these so called “analysts” have to say. If you look at the bigger picture it makes perfect sense for Ericsson to be in the thin modem business, with Ericsson’s view on the Network society, etc. The thin modems are the enabler of the end user experience that is so important when Ericsson sells their base stations.

  7. David Manners
    March 19, 2013 10:23

    Good point random_guy I’m sure you’re right. Ericsson were making positive noises about the modem right from the start of the ST-E divestiture programme. At the analyst conference call it was clear the analysts couldn’t get their heads round the commercial case (or lack of it) for Ericsson keeping the modem unit. I think we don’t know the whole story. Someone, or multiple people, are interested.

  8. random_guy
    March 19, 2013 10:15

    Selling might be easier now that STM is removed from the deal.
    Hopefully the modem business goes up and they could even hire more people.

  9. Mike Bryant
    March 19, 2013 10:07

    > ‘We were somewhat surprised by the lack of buyers for ST-Ericsson’s modem business given ST-Ericsson’s 4G LTE products, which are production-ready,’ says Strategy Analytics.
    I don’t believe this was ever offered for sale on its own so the lack of buyers is hardly surprising !