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NEWS

Bluetooth chip market "taking off"

From "Bluetooth's finally fullfilling promise," by Russ Arensman, EDN, 1 October:

"It took longer than expected, but the Bluetooth chip market is finally taking off, thanks to surging demand for wireless connectivity between cell phones, wireless headsets, PCs, autos and a growing list of other electronic products.

"Bluetooth, a short-range wireless network technology, transfers data between phones and computers and, when used with a Bluetooth-equipped headset or car, lets users conduct hands-free conversations. It's also used to link wireless computer mice to PCs and is being designed into printers, digital cameras, MP3 music players and game consoles. Both Sony's PlayStation 3 and Nintendo's Wii game consoles will use Bluetooth technology to receive signals from handheld controllers. Speculation also is rampant that Apple Computer's iPod music players may soon use Bluetooth to beam music to listeners' wireless stereo headsets.

"CSR, the leading Bluetooth chip vendor, expects to ship more than 300 million Bluetooth transceivers during 2006. Analysts forecast that the U.K.-based fabless company's annual sales, which are all Bluetooth-related, will climb from $487 million to $800 million this year. Meanwhile Broadcom, the market's No. 2 vendor, now gets 11 percent of its revenue - more than $100 million per quarter - from Bluetooth chips, according to Merrill Lynch analyst Srini Pajjuri. That's quadruple the company's Bluetooth sales a year ago.

" 'The market's very, very buoyant at the moment,' says Stuart Carlaw, a wireless analyst with ABI Research. He expects about 540 million Bluetooth chips to be shipped this year, up 70 percent from 317 million in 2005, with shipments growing to 1 billion units annually by 2009.

"What's fueling the growth? 'Two words,' says InStat analyst Brian O'Rourke: "Mobile phones" ...Handset makers initially dragged their feet on adding Bluetooth capabilities, but that started to change by 2004 as chip costs fell and interoperability problems between Bluetooth and WiFi networks were resolved. Bluetooth was used first in expensive multimedia phones such as flagship Razr from Motorola (Broadcom's biggest Bluetooth chip customer) but now is making inroads into midrange and even some lower-cost phones.

"O'Rourke estimates that about one third of the GSM handsets shipped in 2005 were Bluetooth-enabled, compared to 10 to 20 percent of CDMA phones, the prevalent U.S. mobile standard. Analysts expect up to 90 percent of phones eventually to be Bluetooth-equipped. Bluetooth headset sales also are growing fast. InStat forecasts that shipments of Bluetooth mono headsets will increase from 33 million in 2005 to 55 million in 2006.

"CSR and Broadcom dominated Bluetooth chip sales last year, with a combined 80 percent of the market (see chart), but several other vendors - including Infineon, Marvell, Philips, RF Micro Devices, STMicrodevices and Texas Instruments (TI) - gaining market share this year.

"Bluetooth chip set prices have fallen in recent years from more than $5 to the low $2 range. But Faintuch vows to drive prices even lower with aggressive integration and size reductions. 'You'll see a $1 device eventually,' he says, adding that Bluetooth chips are becoming 'a saturated, commodity market' in which only the biggest, most efficient suppliers will survive.

"The industry's next competitive front is likely to be chips combining Bluetooth with FM radio, WiFi and ultra-wideband (UWB) networking.

"Chip makers also are racing to combine Bluetooth and WiFi networking to meet growing demand from users of voice-over-IP calling services. Bluetooth/UWB combinations are not expected to hit the market until at least 2008, but many consider them inevitable, because backers of both technologies agreed earlier this year to develop a converged version of their standards..."

[Bluetooth: 1 October 2006]