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Are the chips Up for TI?

Are the chips Up for TI?

Texas Instruments' chips dominate the wireless world, but unlike Intel, the dominant player in the wired world, its branding is nonexistent. Consequently, not many end users know they're there. As Intel now advances into the handheld space, WBT asks Danni Glaeden-Dreen from TI's wireless strategic marketing division, "Is TI doing enough to protect its market share?"

Unless you're a wireless developer, the name Texas Instruments (TI) is likely to conjure up images of those ever-so-complicated scientific calculators you insisted on for your math homework, yet never figured out how to use. The name Intel, however, is likely to trigger associations with Pentium processors and that really annoying jingle.

That, ladies and gentlemen, is the power of marketing or, more precisely, branding. Did you know that while Intel's Pentium processor has the lion's share of the worldwide desktop and laptop PC market, TI's OMAP processors have the equivalent share of the handheld and wireless device market, owning a staggering 65% of the cellphone market.

Intel knows. It also knows that while its traditional market of desktop and laptop PCs has reached saturation point with an estimated 600 million worldwide (see www.c-i-a.com/pr0302.htm), the market for wireless devices is already much larger with an estimated one-billion cellphones worldwide alone (see www.gsacom.com/gsm_3g/hot_050.htm), a figure that is expected to grow. No surprise then that it's taking aim at TI's territory with the launch of its XScale line of chips for use in cellphones and PDAs. TI has been in this market since it began. Such longevity brings with it a number of technical and business advantages. But is this enough to enable it to hold its footing?

We talked to TI's Danni Glaeden-Dreen to find out. She said:

TI has been in the wireless space for over 10 years. We've done particularly well within the GSM space. In terms of worldwide penetration we are in the majority of the handsets that exist within the market today. Our strategy has been on delivering the high performance and low power requirements that are demanded by wireless terminals, and that kind of focus has stood us well for our chip sets whether they are on the base end side, or of the type that go into handsets. One of the things it has enabled us to do is solve some of the problems that exist with the migrating standards of wireless terminals.

As we move to next-generation wireless, our strategy is to focus on a family of processors ­ our OMAP platform. The whole goal is to provide high performance and low power while giving the flexibility of a scalable architecture that is hardware and software based. It helps us to help our customers segment the market and deliver the right solution. At the end of the day that's why end users buy wireless devices.

To the market observer it may seem that focusing directly on the OMAP platform's space is Intel's strategy too, with the recent release of its XScale line of chips for use in both mobile phones and PDAs. An avalanche of partnerships and other announcements has followed the release of XScale, making Intel's intention to go head-to-head with TI and its OMAP platform pretty obvious. Taking this into account, is TI's incumbent advantage and this focus on low power, high performance, scalable, and flexible solutions enough?

"Yes," says Glaeden-Dreen, "we've been in the market the longest. But we don't look at that longevity as an entitlement. We know we have to continue to focus on where the market is going, asking, ŒAre there ways for us to deliver further value to our customers, which allow them to add value to the end user?' This approach is very much a strategic part of TI's plans in general and, in particular, of our wireless focus. We may have been around the longest but we do not rest on our laurels at all!" says Glaeden-Dreen.

It doesn't take great investigative skills to uncover evidence that this is indeed so. Even though TI has historically had the competitive advantage when it comes to wireless architecture and systems experience and expertise, partnerships, and product range, the company has not been complacent. Indeed, far from it. It has invested in a $100-million development program that includes setting up and supporting its OMAP Developer Network, OMAP Technology Centers, and a range of other partnership initiatives.

In fact TI's partnership programs are very cohesive. It has developed relationships with a wide developer base and its strategy has been to put them into six big buckets: multimedia, interactive games (wireless gaming), mobile security, location-based services (LBS), advanced speech technology, and mobile commerce.

"These are the areas in which operators are looking to quickly develop services, and our relationships with the likes of Packet Video, Real Networks, etc., will prove important. We have provided the support infrastructure for them to be able to launch those kinds of services ­ particularly as they've already been mapped and are in the process, if not already optimized upon our platform," says Glaeden-Dreen.

Training is also an important part of TI's partnership program. "We spend a great deal of time and effort providing training to our partners. In addition to educating them about our solution, we also make sure they understand the market opportunity. Some of these guys have trained in the wired world so we have to talk to them just a little bit about what's going on in the wireless market.

"We have strong field support, so within TI and within wireless terminals we have field application engineers that are regionally dedicated and work their butts off when we have kickoff. We also periodically have a conference or a forum where application developers can learn about a new release or have an exchange of dialogue about their experiences to capture any FAQs, etc.," she continues.

So, does TI believe these partnership initiatives are enough to keep the wolf from the door? "Our platform is really designed with a multimedia focus. We're determined to allow the mass-market appeal, such as the kind of thing we see on the HP Jornado. The relationships we have with our partners allow our platform to be expanded even more, whether that's with real networks or packet videos," says Glaeden-Dreen.

Even so, TI is well aware that partnerships alone will not be enough. "At the outset, partnerships were a differentiator as we have so many of our partners up and running on our platform. It's always a lot better for customers to learn about something when they have it in their hands. Our new developer platform, which is called the Innovator, is a PDA form factor and has everything loaded on it. Visualization is very powerful. Over time, our competitors and even some of the other customers in the area will have a developer network as well. So right now, in the next year or two, our developer network, because of the level of it, is a differentiator, but in the long term this will not be so."

What is TI banking on? "Well, in addition to having a breadth of product offerings, we also have chip set solutions and reference designs. Those reference designs, into which we put a lot of energy, are basically a comprehensive system solution such that some of the assemblers have a terminal that is up and running so our customers can have products in the marketplace within six months."

But Intel has such reference designs too. In fact many industry watchers interpreted the recent announcement of a collaboration agreement between Intel and Microsoft to develop and sell reference designs for Smart Phones as a blow to TI. I asked Glaeden-Dreen whether TI viewed it as such:

Microsoft and TI have collaborated to produce solutions on the Smart Phone side and this time last year we marketed our first reference design with Microsoft. It was on their Stinger platform. This year we're in the second generation of that Smart Phone solution and that is the Avenger platform, so our relationship with them in terms of delivering on the wireless handsets with their overall software solutions is very cohesive.

If you recognize who our customers are, we have some very strong alliances on the PDA side, particularly with Palm and some of the other major PDA vendors. Our expertise in the phone space is something that Microsoft values very much. But TI's hit when it comes to wirelessly enabling terminals will not be affected in any way by Microsoft spreading things around. And it in no way diminishes the commitment between the two companies when it comes to delivering wirelessly enabled devices.

"Spreading it around" is a good description of Microsoft's strategy, and indeed of the wireless industry's strategy in general. Take last month's Symbian Developer's Conference, where Intel, Texas Instruments, and Motorola all announced programs and support for the new Symbian OS 7.0 in their bids to become the standard in next-generation mobile phones. Such a universal move could be interpreted as the end of Microsoft's dream to make a version of its Windows OS the future operating system for next-generation phones. However, all three of the chip manufacturers have pledged support for Microsoft's OS as well.

Everyone supporting everything should make for an interesting battle, especially as all players bring strong assets to the table. The ultimate winner in the short to medium term is likely to be determined by the success of the developer programs. The first company that helps get out applications that meet market needs will obviously have an advantage. In the long term other factors will become increasingly important. As the market becomes more consumer driven ­ and it will ­ branding may well become an issue. Intel was revolutionary in recognizing the importance of promoting its brand to end users in the wired world, and is sure to have the front-of-mind advantage among users in the wireless world too, as things currently stand.

Could such market appeal pose a threat to TI? Glaeden-Dreen says:

Market appeal has more to do with the fact that we focus on attracting the customers who deliver the end equipment and meet their needs ­ not those of the end users. In order to do that, we haven't had to put a direct focus on the end-user community. Whether doing so would serve a competitor well I don't know. But I do know that operators and a lot of carriers have spent a great deal of money investing in spectrum.

This means they have to find a way to generate revenue, which is not going to be done on hype, but on solutions that allow them to create the applications and services that bring that revenue in. That's why we focus so much on the OEMs that are delivering the solutions and showing some respect for their customers who are the wireless carriers.

Focusing on OEMs is the right strategy at this stage in the market's lifestyle, and Intel clearly recognizes this too. More precisely, focusing on helping these OEMs deliver first-to-market 2.5G and 3G solutions is the way to go. There is plenty of evidence that TI has a strong focus on achieving just that but, according to Glaeden-Dreen, its real differentiator is its wider focus on customers' needs.

"Our true differentiator is that we're focusing on the overall cornerstones of business in terms of value, stability, and growth. We've maintained our focus and been true to our market by listening to our customers and delivering what they ask for. So our platform is open, scalable, and flexible. It allows the new entrant to think big, yet start small and scale fast. Differentiation lies in aligning with our customers and executing to their requirements," she concludes.

Such a focus will certainly do them no harm, especially in a market famous for overpromising and underdelivering. In fact, with recent revelations that one of the key components of Intel's Personal Client Architecture (PCA) ­ the digital signal process (DSP) technology that Intel has been developing with Analog Devices (AD) ­ has yet to see the light of day, the return to such cornerstones may become a highly valued asset. Could such chinks in Intel's armor open up a gap for TI?

Maybe, but not one TI is counting on, according to Glaeden-Dreen: "It's not a gap from our perspective. It's a reflection of their inability to execute that is not allowing them to take advantage of the gap. Their collaboration with AD, as well as their efforts to acquire DSTC, was an attempt for them to close the distance between them and us. Therefore it is having more of an effect on them. We've not tried to focus on them as leading the market. Our focus is to continue to deliver the products that we commit to."

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