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Analysis: SiRF's ticket to survival

Posted: 17 Jun 2009 ?? ?Print Version ?Bookmark and Share

Keywords:GPS? PND market? processor? navigation system? Bluetooth?

SiRF Technology Holdings Inc. is not in a good place. The GPS chip supplier faces a declining market for personal navigation devices (PNDs); increasingly tougher competition for design-wins in mobile handsets; and on-going legal entanglements with Global Locate, one of its competitors, which Broadcom bought in 2007.

A merger with CSR, a leading Bluetooth chip vendor based in the U.K., is the best hope for SiRF's survival in a mobile handset market demanding the best multi-radio connectivity solution. The CSR's deal to acquire SiRF awaits approvals of shareholders at respective companies on June 25th.

Still, a huge challenge ahead of is the integration of the two geographically distant teamsSiRF in San Jose and CSR in Cambridge, the United Kingdom. The two companies' first jointly-developed multi-radio silicon won't be launched until 2011, another potential problem with the race for integrating multiple radios in cellphones already in full swing.

Further, the last thing SiRF needed was the recent U.S. Government Accountability Office's (GAO) report on GPS. In the report, GAO warned that the Air Force's delayed acquisition of new GPS satellites may lead to GPS signal degradation starting in 2010, as old satellites begin to fail. SiRF and industry analysts don't agree with the GAO's assessment, but they worry that the report may trigger a panic on the consumer GPS market.

Against this backdrop, SiRF unveiled last week a new multifunction location processor designed for high-volume, GPS-enabled consumer products.

Called SiRFatlasIV, the new processorfeaturing a GPS baseband, touchscreen controller and multi-layer cell flash controllerenables ODMs and OEMs to develop a location-centric multimedia system "at less than $50," according to SiRF.

Kanwar Chadha, founder and VP of marketing for SiRF, said that SiRFatlasIV, using a core of the company's high-end SiRFprima multifunction location processor, is "optimized for the entry-level location-centric systems."

With the new processor, Chadha is hoping for an uptick of a market segment for "embedded, multi-function systems whose focus is location." It's a category for new digital consumer products that "are neither as fully programmable as PC nor as single-function devices as personal navigation devices," according to Chadha.

Such a market, however, is as elusive as its production definition.

GPS handsets
The good news for GPS chip suppliers is that worldwide shipments of GPS-integrated mobile devices are growing at an annualized rate of nearly 40 percent over the next five years, according to Harry Wang, senior analyst at Parks Associates.

The bad news, however, is that the most of the growth is in mobile handsets, not in PNDs, in GPS-enabled PDAs or personal entertainment devices. In short, if your GPS chips are not in many cellphones, you are not positioned to catch the biggest wave for upcoming GPS market growth.

Park Associates' Wang said that mobile phones and smart phones were 83 percent of GPS units globally shipped in 2008. The mobile phone segment on the global GPS market will continue to grow to 90 percent by 2012, he predicted.

In contrast, the unit share of GPS-enabled PND will drop almost by half from 15 percent in 2008 to eight percent in 2012, according to Park Associates.

Even worse is the continuing downward spiral of the average selling price for PNDs. The size of the industry-wide PND market in 2008 was $6.8billion in value. That will go down to $5.7 billion in 2013, according Wang, despite unit shipments that are expected to grow at a compound annual growth rate of eight percent.

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