CES Thursday

I arrived at the South Hall to pick up my press pass with the usual fear and loathing: I don't gamble and I hate crowds, both of which define Vegas. Fortunately the crowds this year at CES are a lot smaller than last year, and the number of startups willing to gamble their annual marketing budget on a booth has also diminshed. There's still plenty worth seeing, but at least you don't feel quite so much like a salmon swimming upstream when you go to see it. I'm interested to see whether large trade shows like CES can weather the coming economic storm or instead blink out like once-mighty Comdex. My guess is that small local shows are the wave of the future and large shows the new dinosaurs.

My vote for the most fun exhibit is Nvidia's 3D demos of Guitar Hero. People were standing in line to grab a pair of 3D glasses to watch a computer-generated version of Sting rip through some hot licks. OK, so these guys are just chipheads, but they definitely know something about demand creation.

Qualcomm's demo of Android running on their Snapdragon chipset was also noteworthy, if not being quite as snappy. T-Mobile's G1 handset, made by HTC, may be the first to run Android--using Qualcomm's chipset--but Motorola, Samsung and numerous other manufacters have announced pending products based on the Android platform. Expect Android to unleash a wave of new handset applications, drive pricepoints down and cause heartburn for carriers whose 'walled gardens' will be under attack.

Steve Ballmer's opening keynote painted an optimistic future for technology: "No matter what happens with the economy, our digital lives will only get richer." The big opportunities for the tech industry are the convergence of the PC, phone and TV; a more natural interaction with devices that will incorporate speech and hand gestures; and 'the connected experience between devices' ("Was it good for you, too?"). Windows 7 beta will be available shortly and will "deliver the ultimate Windows experience." One can only hope that will be resemble Windows embedded and not Vista.

Blackberry’s Got Seoul

The Wall Street Journal announced today that Canada’s Reasearch in Motion (RIM) has finally cracked the Korean market. One more domino falls before the inexorable march of the Blackberry.

The South Korean South Korean government said it will remove a regulatory hurdle to the sale of advanced cell phones by outside manufacturers. In 2005 the Korea Communications Commission ruled that cell phones connecting to the Internet in Korea must use domestic software, called Wireless Internet Platform for Interoperability (MIPI), that was supposed to make it easier for local programmers and cellular service companies to offer Web-based services. Since foreign cell phone makers didn’t find it worth their while to modify their phones just for Korea, the ruling helped Samsung and LG account for 80% of handset sales in the country. Korea has about 35 million cell cell phone users and sales of 5.1 million phones in Q308.

The WIPI rule will be rescinded as of April, opening up the previously protected Korean to foreign competition. The ruling is the result of a more open regulatory environment following presidential elections earlier this year. But it is also a reward for RIM’s persistence in applying four times since 2006 to gain entrance to the Korean market without using WIPI software; complaint from legions of Road Warriors stepping off planes at the Seoul airport probably didn’t hurt, either.

It may also be karmic justice now that Samsung has passed Motorola to be the second largest cell phone seller in the U.S., Mot now has a chance in Samsung’s own backyard. And Nokia—number one in handset sales internationally, with Samsung being number two—can suddenly compete in Korea, where it has a huge factory but no sales.

Expect the famously hip Korean teenagers to snap up Apple iPhones as quickly as they hit the stores. And expect their workaholic parents to be sneaking peaks at their shiny new Blackberries while the rest of the family watches TV.

Don't Shoot the Messenger

David Carr has a column in the Media & Advertising section of today's New York Times that's worth reading, whether you're a provider or consumer of news: Newspapers Jettisoning Top Talent to Cut Costs:

"Right now, the consumer has all manner of text to choose from on platforms that range from a cellphone to broadsheet. The critical point of difference journalism offers is that it can reduce the signal-to-noise ratio and provide trusted, branded information. That will be a business into the future, perhaps less paper-bound and smaller, but a very real business."

Carr takes the example of Circuit City, who fired all their most experienced (read: highest-paid) employees and then saw their customer service ratings tank, which ultimately put the company into bankruptcy. The same thing is happening with newspapers, according to Carr--and the tech trade press, I'd add. "It is not just the cutting, but the cutting of more-experienced staff, a kind of slow-motion suicide," in Carr's words.

I needn't point out my blatant self interest in siding with Carr. But in the small world of the tech trade press, we've all seen the results of taking the Circuit City route. Colleagues get laid off, editorial quality declines and advertisers look to other venues. That has helped some smaller fish like Portable Design (full disclosure), but the overall effect has been a decline in quality coverage of the industry. There are fewer of us left and we're all stretched pretty thin.

What's the Alternative?

Ultimately content is king and the vehicle for providing it is secondary. This may be reassuring news to editors and journalists, but it doesn't address the problem faced by publishers. Print costs continue to escalate while ad budgets decline. That's one reason for a big shift from print to online advertising, which is cheaper. But as any publisher knows, when your advertisers trade print ads for online ones, you're trading dollars for dimes--which is largely why advertisers are going online. Your publishing costs decline sharply but your revenues decline even more sharply. So the cost of your editorial staff now becomes your number one expense. What do you do?

Killing print entirely is one option. If you were having trouble making money on print before, keeping a smaller version of a magazine going once ads move online is even less cost effective. Why not kill it off altogether and go 'online only' as Byte, eNews and many others have done long since?

Because rumors of the death of print are both exaggerated and premature. Computers are a better retrieval mechanism than print pages, but the latter are still a helluva lot better presentation medium. I read four newspapers online every day--and check in on numerous blogs--but I far prefer to read feature articles in print. I read the news in EE Times every day but read the print editions of EDN and Electronic Design in preference to their digital editions, which I notice they're starting to flog of late.

I also actually read ads in print, where you can glean much more technical information than you can possibly fit into an online banner ad. Granted, click-through information is useful--though not very, unless you construct separate landing pages for each ad---and even then you need to cajole readers into registering in order to capture any really useful information. Just put a URL at the bottom of your print ad and you get the same results. When I click through from a banner ad, I'm usually just curious; when I go to a web site after reading a print ad, I'm serious.

So print is the preferable place to push products.

Product Mix

So my simple answer to a complex problem is: you need variety of information outlets, all of which channel the views and opinions of the best people in the business. News goes online, features in print, show coverage in videos and interviews in both video and print. The perceived value of each of these channels--which will vary directly with the value of the content you deliver through them--will determine the success of any business plan built around them.

With the publishing industry going through a major transformation right now--the dynamics of which the best and the brightest are all trying to decipher--it's prudent to spread your bets by maintaining a wide product mix. None of those elements alone may prove sufficiently successful, but in the aggregate they should.

If you have compelling content.

Wi-Fi on Amphetamines

Almost lost in all the election media frenzy was the FCC’s approval yesterday of a plan to open the white spaces between broadcast TV channels to cell phones, laptops and a wide range of portable consumer electronics devices. These frequencies between 54-698 MHz are highly prized, as they can easily penetrate buildings and other obstructions; they also enable far faster communication than you can get over Wi-Fi, which operates at 2.4 and 5 GHz.

“White spaces are the blank pages on which we write our broadband future,” said Democratic Commissioner Jonathan Adelstein during the meeting. “Let's hope this is not just Wi-Fi on steroids but Wi-Fi on amphetamines as well because it will be that fast.”

How fast is that? Cable modems—the fastest it gets right now—can theoretically deliver 20 Mbps downloads, though mine typically tops out at 5 Mbps when no one else is online and the wind is right. While I haven’t seen any test results, some sources are predicting multi-channel MIMO white-space modems in a few years delivering 40 Mbps—an 8x improvement over the best you can hope for currently.

I Hear You
The decision was hard fought, with Sergey Brin, Larry Page and Bill Gates personally lobbying the commissioners on the importance of opening up these channels, which they claimed would spur both competition and innovation. AT&T and Verizon—who paid heavily for C Block spectrum in the FCC’s recent auction—were against the idea, though their obvious economic self interest didn’t contribute to their credibility.

The strongest opposition came from the entertainment industry, who feared that unlicensed devices on these frequencies would interfere with wireless microphones. Even Dolly Parton weighed in, asking the commissioners to delay the hearing so she could comment further. Dolly Parton appearing before the buttoned-down FCC would certainly have caused enough of a media circus to break into the evening news—and derail the proceedings. In the end Chairman Martin ruled that the public interest was best served by opening up the white spaces for unlicensed portable devices.

Trust and Verify
Low-power, unlicensed wireless devices are covered by Part 15 of Title 47 of the Code of Federal Regulations. Under Part 15 compliance is a self-approval process where the manufacturer performs the necessary tests and determines that the device complies with the rules. The FCC makes the rules and trusts the manufacturer to verify compliance. Every low-power wireless device you own has a Part 15 compliance stamp on it somewhere.

In this case the FCC went one step further, conducting extensive device tests to verify that in fact unlicensed devices could co-exist in the white spaces without causing interference to legacy users. “Normally, the Commission adopts prospective rules about interference and then certifies devices to ensure they are in compliance,” Martin said in a statement. “Here, we took the extraordinary step of first conducting this extensive interference testing in order to prove the concept that white space devices could be safely deployed.”

Hang In There
While the FCC ruling has immediate effect, the white spaces won’t open up until next February, when all U.S. analog TV signals go off the air. It will then take some time for consumer electronics manufacturers to get their new wireless devices certified and into production, and it will take longer to get the wireless infrastructure in place.

So “Wi-Fi on amphetamines” isn’t right around the corner, but it is coming soon. It will be worth the wait.

Ire at IR

On the surface it seemed to make sense. On August 15 Vishay made an unsolicited offer of $1.6 billion to acquire International Rectifier, a venerable company whose discrete power-management IC product lines would complement Vishay’s. IR had fallen on hard times, their stock had tanked, and Vishay apparently saw this as an acquisition opportunity. IR, in turn, just saw it as opportunistic and rejected the offer out of hand. As Richard J. Dahl, IR’s Chairman of the Board, put it in his response, “Your proposal is inadequate, opportunistic and not in the best interests of International Rectifier and its shareholders.”

Not being one to give up easily, on September 9 Vishay increased its offer slightly to $1.7 billion and announced its intention to nominate three candidates to IR’s board. This is reminiscent of Carl Icahn’s move on Yahoo’s board after they repeatedly rejected Microsoft’s buyout offer. Jerry Yang still has his job but no longer his job security. Whether Oleg Khaykin, IR’s CEO, winds up in the same position remains to be seen.

Vishay rightly sees an IR acquisition as complementing its product lines, though whether their cultures are complementary is unclear. What is clear is that Vishay can’t afford to leverage itself too much farther in order to top up its offer, though if it did get the support of both boards, it could raid IR’s cash kitty of $700 million to complete the financing.

An old line company with strong market share, depressed stock and a big cash stash is a tempting takeover target. IR is a proud company and wants to work its way out of the doldrums. Vishay is facing a market with shrinking liquidity, so raising the cash won’t be easy.

Stay tuned to see how this shakes out.

The Androids Among Us

The buzz is we’ll have Androids in time for Christmas. The FCC has approved the HTC Dream, the first handset based on Google's Android mobile platform. According to an AFP report, T-Mobile will launch the device, probably in time for Christmas sales. the Washington Post reports that the HTC Dream will feature a touchscreen, Wi-Fi, a BlackBerry-style 'jogball,' a Safari web browser, and Google applications such as Gmail, Maps, and YouTube.

Meanwhile the Android Software Development Kit (SDK) is still in beta test, though Google recently released version 0.9, which it claims is “now pretty stable and we don’t expect major changes.” This is a pretty unproven platform on which companies are expected to make multi-million dollar bets. Still, the lure of avoiding paying licensing fees to Microsoft or Symbian for their mobile OS’s has induced a lot of big players to sign on with Google’s Open Handset Alliance.

Android may take a while to get its legs under it, but it’s certainly a well-funded startup and one that’s already creating huge waves in the handset market even before it’s finalized. This will be an interesting ride.

CEO Interview: Necip Sayiner, Silicon Labs

While Austin-based Freescale and AMD have been taking their lumps of late, Silicon Laboratories (SiLabs) quietly continues to be a major Austin success story. It’s admittedly easier when you’re not taking aim at the big dogs—and thus not winding up in their cross hairs—but SiLabs has continued to innovate its way to healthy growth for a number of years now in highly competitive wireless markets.

SiLabs is a fabless semiconductor company focused on high-performance, analog-intensive, mixed-signal ICs. Their biggest revenue generators are their VoIP and embedded modem products, the latter being widely used in high-definition set-top boxes. Their CMOS FM tuners are designed into mobile handsets by virtually every manufacturer, and they’ve recently introduced a 3x3 mm AM/FM receiver. In the horizontal space, they’ve shipped over 100 million low-cost, mixed-signal MCUs and 100,000 development kits. This mixed vertical/horizontal strategy has resulted in a GAAP gross margin of 63% for the latest quarter and a 38% increase in revenues over the same quarter last year.

In March, 2007 SiLabs sold its AERO RF transceiver line to NXP for $285 million. Using some of the cash from the sale, in January SiLabs bought Integration Associates, who make ASSPs for short-range wireless and audio subsystems. Much of the rest of the cash is earmarked for SiLabs’ extensive R&D pipeline.

Portable Design sat down recently with SiLabs’ CEO Necip Sayiner to ask about its products, its business model and its plans for the future.



[http://www.silabs.com/]