Carl Weinschenk spoke with Linley Gwennap, principal analyst, The Linley Group. Last month, the firm released a report, "A Guide to Wireless Handset Processors."
Weinschenk: What did the report focus on, and what did you find?
Gwennap: What we see in the cell phone platform is a lot of new features and my role is looking more at the inside of the phone, the chips that are going into that. The key thing that impacts our readers is that when you add a new feature to a phone, let's say video, typically that feature is on a separate chip. Adding a new chip into the phone is going to make the phone more expensive and could reduce battery life. So you typically are going to see [new features come] into high-end phones that are going to be more expensive, not in the beginning from mainstream phones. Over time, as the particular feature gains popularity, then the phone makers want to merge [the new features] into the main processor in the phone. By the chip makers, I mean companies like TI [Texas Instruments], Freescale and Broadcom. Once they do merge that feature in, it becomes much less expensive to add video and it doesn't impact the battery life as much.
By focusing on chips, we see the future a little bit in terms of what is going to happen with the phones over the next year or two. What we see right now is that being able to play back video clips is becoming very popular. All the chip guys have integrated that feature into their processor. You certainly can go out today and buy a phone that plays video clips. In the next year or so, it will become pretty much a standard feature on any feature phone. The next step beyond video is the mobile TV. That's a couple of years behind.
Weinschenk: Is the integration of functions into the processor impacting smartphones?
Gwennap: What we see is the same sort of trend. If you buy a smartphone, it needs one processor for all the cell phone stuff and a separate processor running the OS and more complicated apps that make the smartphone more expensive. So what we see now is that some of the vendors, particular TI and Qualcomm, are introducing chips that have the capability to run the OS and cell phone functions on the same chip. Two processors on the same chip [is like] two brains on the same chip. One does calls, the other focuses on business applications. By cramming it onto one chip, it's going to reduce the cost of smartphones.
Weinschenk: Will vendors more likely use these advances to reduce costs for a set number of features, or increase the functionality while leaving the price the same?
Gwennap: They will do both. They will take the same advantages in technology and apply them in both directions. On one hand, in the upper portion of market or mid-range, you have the feature phones. The idea is to cram more and more features into phones every year and not raise the price. We are seeing over time new features in video or smartphone functions or 3D graphics added into phones. At the same time, vendors are trying to cut costs of really basic phones. The real focus over the past year is creating basic phones for under $50 and getting them into developing economies. The very basic phones would not do video or gaming or anything complicated, but would do basic address book features, SMS, GSM. So at the low end, you get as much as you can into one chip. Even in the higher-end phones, prices are down a little bit because of these advances. Where a radio used to be 10 chips, they became four and now are down to two. We're seeing a lot of advances as new semiconductor technology comes out.