The Android Invasion: New Devices, Technology and Opportunities

an⋅droid
  –noun
1. an automaton in the form of a human being.
Origin: 1720–30; (source: dictionary.com)

2. the wireless industry's best chance to compete with the iPhone
Origin: 2007 (source: Google, Open Handset Alliance).

And then their was DROID. (2009)

If you work in the wireless industry, you've probably been aware of Google's initiative to penetrate this space with their open-source operating system for smartphones. After all, the first "Google phone" was introduced by T-Mobile over one year ago. Know anybody who uses one? There hasn't been much consumer awareness.

But suddenly, Android™ smartphones appear to be everywhere. Estimates are that Verizon Wireless is spending $100M on their DROID advertising campaign. As Advertising Age has said, this is a saturation campaign that will make DROID impossible to avoid - on TV, the internet, in magazines, newspapers.. all forms of media.

I've been following this sudden flurry of activity which began shortly before the CTIA Wireless I.T. & Entertainment show in San Diego in October, with Motorola's announcement of the Motorola Cliq™ and MOTOBLUR™. The pace of announcements then took off, starting with Verizon announcing their strategic partnership with Google just before the show opened, followed by Samsung's big splash for the Moment™ on CTIA's opening day joining the HTC Hero™ in San Diego. Suddenly the count of Android™ smartphones available in the U.S. went from 1 to 4, and then quickly to 8 devices with no signs of slowing down.

The rapidly developing Android™ ecosystem presents a great opportunity for application developers, hardware manufacturers and wireless operators. Verizon, Sprint and T-Mobile collectively account for more than 170 million U.S. cell phone users, greater than twice the subscriber base of iPhone-dependent AT&T. To grow the market even further, Android™ is expanding to e-book readers and netbooks, and can be expected to show up in other consumer electronics devices as the internet and digital media converge further into the digital living room.

I recently published a comprehensive report that describes the opportunities and resources that are available to take advantage of this "Android Invasion". You can download a free excerpt, and purchase the complete report at http://digdia.com/droid09/droid09_main.htm.

Here is an outline of the report:

•Section 2: Android™ invades CTIA Wireless IT & Entertainment, provides a hands-on review of the Android™ smartphones on display at CTIA wireless from Samsung, HTC, and Motorola. Since Verizon began their DROID campaign shortly after CTIA Wireless, the new Motorola DROID and HTC DROID Eris are also included in the review. A detailed feature list is provided in a 1-page table to facilitate a direct comparison of the new Android™ handsets.

•Section 3: Opportunities and Tools for Android™ Developers, describes opportunities to engage with the major players in the Android™ ecosystem that are sponsoring developer communities to feed the Android™ Applications Market. This guide provides information on how to take advantage of resources provided by the wireless operators, handset manufacturers, and semiconductor vendors who are facilitating apps development by providing tools and assistance to developers at little or no cost.

Though most of the wireless industry technology focus is now on Android™, there were other significant product announcements and new technologies on display at CTIA Wireless I.T. & Entertainment that will impact mobile devices rolling out now and in the near future.

•Section 4: Nokia N900 and Maemo, reviews the newest “tablet” device from Nokia which marks the company’s move away from the Symbian operating system to a new Linux-based application platform. Opportunities are also described here that are available to developers who wish to join Nokia’s Maemo community for marketing of applications in the Ovi store.

•Section 5: Qualcomm and FloTV™, includes a review of the company’s new PT 350 and their strategy to promote adoption of mobile TV through this dedicated handheld device along with in-car entertainment systems.

•Section 6: Qualcomm mirasol® Displays, describes a promising new technology beginning to emerge from Qualcomm’s R&D labs that may allow for color eBook readers to be built with passive reflective displays, similar to the Amazon Kindle.

•Section 7: Summary, starts with a wrap-up of the Android™ smartphones that are currently available in the U.S., including a brief guide for consumers who may be considering purchase of one of the new devices.

In “Opportunities and Challenges for Android™”, some of the issues facing the development of the Android™ ecosystem are described, along with a summary of the opportunities and incentives for participating in this wireless industry campaign to displace Apple and the iPhone.

Finally, a summary analysis of the two key developments from Qualcomm, FLO TV™ and mirasol® displays, is provided.


The Android Robot reproduced from work created and shared by Google and used according to terms described in the Creative Commons 3.0 Attribution License.

part 2 - WCA 10th Annual What’s Hot (and What’s Not) in Mobility 2009

This is part 2 of my report on "What’s Hot (and What’s Not) in Mobility 2009", the Wireless Communications Alliance's (WCA) annual investor panel discussion held on November 18th. Click here for part I.

The Panel:
Moderator: Scott Ellison, VP Mobility Wireless, IDC

Panelists:
Eric Zimits, Managing Director, Granite Ventures
Dev Khare, Vice President, Venrock
Tim Chang, Principal, Norwest Venture Partners
Scott Raney, Partner, Redpoint Ventures

Wireless network capacity issues, and net neutrality

Regarding the topic of a "spectrum crisis", which was highlighted at the recent CTIA Wireless I.T. & Entertainment show and is now a topic of much discussion in the FCC's mobile broadband plan, one of the panelists expressed the opinion that "price segmentation" will solve the problem of bandwidth overload, while complaining that his dropped calls are due to teenagers overloading the network with Facebook and YouTube.

One of the panelists predicted that Verizon Wireless will raise pricing for data plans in 2010, claiming that "it happened for SMS". Another panelist pointed out that this would be difficult to do, since many consumers just got signed up with flat rate data plans. One panelist was especially bullish on femtocells as a solution, though the question was raised on whether consumers would support this solution - especially if the femtocell was providing open access.

(Femtocells increase cellular network coverage by placing low power transceivers off towers, in consumer's premises or other privately-owned buildings. Femtocells are basically BYOB: bring your own backhaul, and would require a consumer to connect to their wireline broadband network. An open femtocell would be using a consumer's equipment and broadband connection to provide service to others.)

Just this week, Fierce Wireless published an article describing how wireless operators are LOWERING data plan pricing, not raising prices. While AT&T (especially) complains that they need more spectrum, they continue to sit on the 700MHz block they acquired in last year's FCC auction, while promising an HSPA upgrade and wait & see on LTE. Rather than complain about YouTube users, one should complain to AT&T.

I addressed the subject of network capacity in great detail back in July, in my report on The Emerging 4G Wireless Landscape in the U.S.My press release at the time had the title Explosive Growth in Mobile Video Shifts Advantage to WiMAX Providers Until 2012.

My opinion is that this "crisis" represents an opportunity for Clearwire and its partners (especially Sprint), IF they can meet their rollout goals to achieve a national footprint for mobile WiMAX, and IF they can get some slick dual-mode 3G/4G handsets on the market. With Google invested in Clearwire, will we see a dual-mode 3G/4G Android smartphone in 2010?

There is a lot of discussion in the wireless industry about trying to avoid being "dumb pipes", i.e. how to monetize delivery of content to mobile broadband users. Tiered-pricing is one of the strategies you will hear consultants discussing but never the operators themselves. One should keep in mind that uptake of 3G services only reached the 10% level recently, still an early adopter stage. Now that consumers (driven largely by the iPhone) are finally increasing their adoption, operators can't price them off their networks to solve capacity issues. It just doesn't work that way. Operators desperately need consumers as subscribers to mobile broadband data plans, because that is the only revenue growth area in the wireless industry, and the content consumers want requires capacity.

The panelists had already said that price discrimination wouldn't work... when they recalled the huge success that operators had increasing SMS pricing while texting-addicted consumers just kept subscribing anyway. What this disruption can cause is a rapid movement of subscribers to a competitive service, what the industry refers to as "churn". This is where the "Android Invasion" (the topic of my latest report at http://www.digdia.com/) will have a major impact, along with the increasing availability of 4G wireless services. The exclusive iPhone/AT&T relationship is extremely vulnerable.

Mobile health

The panelist from Norwest was particularly bullish on mobile technology in the healthcare field, citing the opportunity for low cost sensors connected wirelessly to "the cloud". But connected toilets? The idea described here (not sure if it is real but could be), is that your personal waste products could be monitored to detect and report on your state of health, i.e. sensors for predictive preventative health care.

This is a very hot field in wireless today, and a section of CTIA Wireless was devoted to it in the Wireless Health Pavilion.

RFID for anti-theft applications

This falls into the field of Machine-to-Machine (M2M) applications for wireless technology. Businesses can track equipment and merchandise to prevent theft. It doesn't necessarily require cellular connectivity to implement such a system. I saw a good demonstration of such a solution at CiscoLive! earlier this year.

WiMax and Clearwire

It was no surprise to hear the VCs reflect a prevailing view that "Clearwire has a tough road ahead", and that their real opportunities may be in M2M. One VC made a statement that is often repeated regarding LTE - that the industry has finally settled on one standard. The "industry" in this case refers to the members of 3GPP, i.e. most of the incumbent wireless operators.

I won't dwell on this in great detail here, (see The Emerging 4G Wireless Landscape in the U.S.), but there really needs to be an understanding of just how far behind WiMax LTE is. Already, we see that Verizon Wireless is running behind in their announced plan to have “pre-commercial” deployments of LTE by the end of 2009. As I said in my analysis report, WiMax and LTE will co-exist for at least the next 5 years, if not longer. The opportunity for Clearwire is to be there first when these capacity issues really start to hit hard, which has already happened to 3G networks in other parts of the world.Clearwire's investors; primarily Intel Capital, Time Warner and Comcast, recently added $2B to complete the company's 2010 plan of reaching 120M pops in 80 markets.

Regarding Comcast's involvement as a mobile virtual network operator (MVNO), and investor in Clearwire, one of the panelists remarked that the cable industry "follows a five year cycle where they get interested in mobile". I contend that it is very different now, regardless of what may have happened in the past. People want access to video content on-demand, and the three-screen strategy (TV, PC, cell phone) is critical to Comcast's business. It makes sense that they have invested in the highest capacity wireless network that is currently available, rather than relying on 3G (or waiting for LTE) to deliver their content.

Android and apps stores

For the new wave of Android smartphones to compete with the iPhone, there must also be a convenient means to discover and purchase apps, akin to iTunes. (See Techcrunch for Android Market Badly Needs A Desktop Presence To Compete With The App Store). Google currently has the Android Market but that lacks consumer awareness. One of the attendee's proposals during the Q&A, which has also been suggested earlier (see FierceWireless), was for an Amazon app store. That would certainly solve the issue of consumer awareness.

Mobile payments

A suggestion (or perhaps it was a prediction) from one of the VC panelists was that the Bump app for iPhones and Android could be used as a mechanism for peer-to-peer payments. Bump is currently used to enable contact information to be shared by bumping two phones together.

Mobile ads

The consensus amongst the panel was that business plans for mobile advertising are non-starters. One of the VCs said he just hits delete when he sees one. The VCs agreed that traditional ads don't work on mobile, but the idea of hyper-local ads would be viable (i.e. linked to location-based services) I think that foursquare will develop this as their business model

"Intel is toast"!

To my friends at Intel.. I didn't say this, it came from the VCs!

The issue here concerned Intel's Atom processor vs. ARM in mobile devices. I was very surprised at how strongly negative the panelists were on this, with comments like "Atom is a loser". My interpretation is that the panelists must think that ARM will displace Atom in the rapidly growing netbook market, which Intel currently dominates.

I have heard discussions, most recently at the ARM Techcon3, aggressively positioning ARM cores against Intel, so that idea is nothing new. In smartphones, ARM does dominate. It appears to me that the VCs have swallowed ARMs argument that their cores result in a smaller, lower power die than Atom. But surely the VCs are aware that ARM cores do not run Windows 7, or Windows XT for that matter! This then is a 2-sided bet on ARM and Google Chrome. Highly unlikely in my opinion.

Stock picks:

Apparently it is a tradition of the WCA "Hot or Not" meetings to have panelists give their stock predictions. I'm sure I didn't capture them all, as it was pretty rapid fire, but here are a few:

Buy: nVidia, Google, Foreign mobile operators. Africa, China, India. Motorola for smartphones, Picocells, Chinese game developers
Sell: Nokia

WCA 10th Annual What’s Hot (and What’s Not) in Mobility 2009 - part I

On November 18, I attended the The Wireless Communications Alliance's (WCA) annual investor panel discussion on "What’s Hot (and What’s Not) in Mobility 2009". WCA is a non-profit organization bringing together companies and organizations in Silicon Valley that have an interest in wireless technologies.

The Panel:
Moderator: Scott Ellison, VP Mobility Wireless, IDC

Panelists:
Eric Zimits, Managing Director, Granite Ventures
Dev Khare, Vice President, Venrock
Tim Chang, Principal, Norwest Venture Partners
Scott Raney, Partner, Redpoint Ventures

I began live-tweeting the event, but TweetDeck on my iPhone informed me that I had no network connection, asking if I wanted to work in the background. (I did have several bars showing, implying a good signal, but no 3G, Edge or WiFi). Pretty ironic not having cell phone connectivity at a WIRELESS COMMUNICATIONS event, which was held at Silicon Valley Bank (in a meeting room in the front of the building by the way). Hey AT&T... got a map for that?

Bottom line: I lost all my early comments thinking they were being cached, before I realized I was tweeting into a black hole. What follows are my recollections from the remaining notes that I took in the iPhone notepad app.

A wide-ranging number of topics were covered, and the panel of VCs were certainly not shy about their opinions. Here they are, along with my own comments.

Multiple OS standards are a good thing. "CDMA made wireless less boring"

I believe that this comment referred to the emergence of Android as a smartphone operating system. The same can be said regarding the discussion of LTE and WiMAX that followed. Obviously, there is a big difference between user-interfaces and radio network standards, but if competition is good... it's good everywhere.

IP strategies are critical

This discussion referred to the value of patents and intellectual property for wireless startup companies. A comment was made that the value of IP is more for use in bargaining during business negotiations, such as a potential M&A, than in outright value.

What's changed in venture capital?

"The semiconductor segment (for startups) is about as dead as you can get.The Chinese squeezed out all the value."

This is a reference to the large number of fabless IC design startups in China. I believe that a bigger issue is that leading edge digital design in advanced process nodes is just too expensive for a startup. So it was interesting to hear this follow-up comment from another panelist:

"RF and analog are much better startup opportunities than digital. They only require small teams. "Innovation in silicon is in RF and analog. These are critical technologies needed for femto-cells."

Ahhh.. yes. How great to hear a VC recognize the value of understanding that The World is Analog.

Panelist, referring to what happened to semiconductors: "Hauwei is doing to systems now. This is a problem for Cisco."

One of the VCs described how Chinese banks will backup Hauwei if there is any risk of losing a deal, flying bank execs to a customer site to promise full financing at 0% if necessary.

Venture Capital has become "Vulture capital" - late round.

VC panelists agreed there are no up rounds now. Seed investments are better, based (as always) on having "the right team". "Vulture capital" refers to waiting for later rounds to jump in at the lower price in a down round (since there are no up rounds occurring).

"Never been a better time to start mobile company"

This may seem totally contradictory to the "vulture capital" statement. In general the VCs were still bullish on the mobile space, saying that "now is the best time" (to start), advising entrepreneurs to "follow what happened on the internet". Entrepreneurs were advised to look for opportunities where there is "a hole in mobile". Not that entrepreneurs should get any irrational exuberance; the VCs agreed that the price Google paid for Admob ($750 million) is "obscene". (It should be noted the VCs on AdMobs board, Sequia Capital and Accel Partners, were not represented)

Opportunity areas: Software for mobile, but not consumer facing.

Although there was a comment that "maybe android changes" things, the panel's opinion on iPhone app businesses was that they are more suitable for "lifestyle" companies than for VC-funded startups. Something about needing to be in the top 5 apps for 3 months running to make "just $10M" in revenue.

Mobile-TV

Referring to Qualcomm's FLO TV initiatives, opinion was that "broadcast (mobile) TV never took off, and "personalized mobile video is what works in the U.S." In the U.S. smartphone users can take their content with them to do place/time shifting (as with iTunes), and consumers will use the "cheapest means available to access content". In the panelist's opinions live mobile TV is only for regions where there are a large number of mass-transit commuters (i.e. Japan). Panelists also stated that "in-car makes more sense".

I generally agree with this assessment, and Qualcomm's FLO TV strategy is one of the topics I cover in an upcoming report. Look for it at www.digdia.com

Two small semiconductor companies that are doing well in this space were highlighted: Maxlinear - which provides a tuner used for mobile TV in Japan, and Telegent - which has focused on chips for markets where free over-the-air analog TV is still available.

The impact of wireless in emerging markets

A lot has been written about the role of wireless technology in countries where many people will have a cellular handset as their first telephone. To gain a more accurate perspective on this topic, one of the panelists recommended the blog "future perfect" by Jan Chipchase, a Nokia researcher who has field experience observing firsthand the impact of wireless technology in emerging markets.

(check back for part II)

#EDA and iPhone envy

The International Conference on Computer-Aided Design (ICCAD) is being held in San Jose this week. The program is predominantly geared toward presentations of academic research with relatively little industry representation, especially when compared to the (much larger) Design Automation Conference (DAC).

With the EDA sector still struggling to pull out of a six-quarter long decline in revenue, the ICCAD organizers broke from the academic theme in a session titled "What EDA Needs to Change for 2020 Success" - presented by industry veterans Jim Hogan and Paul McLellan, where industry analysts, bloggers and journalists were invited to participate.

Some of the topics put forth for discussion were:

• What will be the silicon platform for complex chip design in the next decade?
• Software signoff why do we need it?.....or do we?
• Where is the highest value area for EDA vendors given the requirements of the electronic systems designer and platform provider?

The graphic above illustrates a prevalent view within EDA that growth will come from addressing the semiconductor design process at higher levels of abstraction; primarily system-level software models. One of the statistics put forth at the session was a claim that software now represents >50% of system-on-chip (SoC) design cost, leading to the (somewhat vague) notion of software signoff.

In my opinion, repeating the same EDA paradigm at yet another level is no solution for industry growth. At best, it can only help recover some of the lost revenue that will continue to result from pervasive commoditization of older generation tools. Where's the innovation?

EDA has for far too long reflected upon the success of logic synthesis, perhaps the last true innovation in design methodology, and searched in vain for a repeat performance - i.e. ESL or electronic system-level design. The real problem with this idea revealed itself only towards the closing part of the Q&A, in a perhaps rhetorical question: "how many EDA companies can handle total SoC integration?" The answer is none.

This is not to be taken entirely as a criticism of EDA. Only a company that actually does SoC design, such as Intel or Texas Instruments, is capable of developing comprehensive knowledge of the entire process. I have written before of the need for greater collaboration between EDA and semiconductor companies. However, EDA has made the problem worse by developing fragmented views developed within point tool silos, exacerbated by artificial barriers. There have been no shortage of abstraction levels developed for use in IC design flows. What is lacking is the 3rd axis for the chart above - the links across abstraction levels to connect the hierarchical SoC design process.

Here's one example. When the introduction of hardware-description languages (HDLs) enabled replacement of transistor-level simulation for logic, it took years to build links between the two levels of abstraction such as the IEEE 1364 Verilog PLI. Yet to this day, some vendors refuse to support VPI, offering only proprietary interfaces in an attempt to lock users into a single company's products.

There are numerous other examples where abstraction levels are, at best, poorly linked:

• separate (and proprietary) physical databases for analog and digital flows
• no closed loop between SPICE and analog behavioral abstraction, such as Verilog-A or MATLAB
  
• lack of connection between design verification and ATE

The iPhone envy comes from the success of Apple's application store. For the first time in the cell phone market, software drove hardware sales. EDA is not alone in this envy, all of the wireless operators and cell phone manufacturers are jealous as well. But let's not be confused here. EDA does not serve the consumer market. EDA can serve the application software component of SoC design, but that is but one more link to be made with the rest of the flow. In and of itself, it is not the answer to turning around EDA.

We can see the problems in 2020 if we just look closer at the problems at hand today. Without breaking down barriers in the flow, in ten years they only get worse.

-Mike