– Did 5G Loom over the Decision?
– No Buyers Are Mentioned
Qualcomm has reportedly closed its recently acquired Ikanos operations and told the Ikanos employees that they will be unemployed as of August 22, according to a usually reliable source and to G.fast News, which says it factchecked with Qualcomm and has a half dozen emails from people who work there.
Qualcomm’s Website makes no reference to closing Ikanos but the Ikanos products are not shown on Qualcomm’s Web page for its networking products.
It was only a year ago that Qualcomm paid $47 million to acquire Ikanos, which was late to market with G.fast chips.
Prior to Nokia’s recent acquisition of Alcatel-Lucent, Alca-Lu had financed some of Ikanos’ G.fast development, perhaps with the though of buying Ikanos’ G.fast chips or even buying Ikanos.
Qualcomm’s only two major Ikanos announcements were:
– The actual although belated launch in October 2015 of Ikanos’ G.fast chips, which the French gateway maker Sagemcom was said to have committed to use.
– GigaDSL chips that are based on G.fast technology for Korean and Japanese telcos to stream major events such as the 2018 Winter Games in Korea and the 2020 Summer Games in Japan. Sumitomo Electronic, NEC and Wave Electronics were said to be making gear that had the GigaDSL chips. Because GigaDSL was an Ikanos product, it is not clear that chips from Sckipio and Broadcom can easily be used instead.
It is notable that no other G.fast-oriented company has stepped up to buy Ikanos from Qualcomm. That includes Nokia, which could use Ikanos’ G.fast chips, as could Huawei, which owns chipmaker Hi-Silicon and is thought to be developing its own G.fast chips.
Qualcomm’s main business is cellular and Wi-Fi, not wireline broadband so the closure will not be a surprise or have a material impact on Qualcomm’s revenues and profits. Several sources have said, but Qualcomm has never confirmed, that Qualcomm has de-emphasized it HomePlug work, perhaps leaving, oddly, that market to its HomePlug and Wi-Fi rival Broadcom.
The Ikanos closure leaves the G.fast chip market to the heavyweight Broadcom and the start-up Sckipio. Both are duking it out at telcos and telecom equipment makers worldwide.
It is unclear whether Huawei’s HiSilicon is or might become a major player in the market for G.fast chips.
What is certain is that some of the world’s top VDSL and G.fast engineers are looking for new opportunities, possibly at companies such as Nokia’s recently acquired and now renamed Alcatel-Lucent, Broadcom, Adtran, which most recently won a deal at Windstream that uses Sckipio’s G.fast chips and possibly Huawei – or any of the world’s major copperwire-bound telcos.
G.fast News said G.fast technology is the last remaining hope for copperwire-bound telcos but that neither the market nor the Ikanos chips developed quickly enough to save Ikanos.
However, G.fast is finally getting off the ground as shown by G.fast News’ recent report that BT intends to reach 25,000 homes with G.fast in Q3 2016 and ten million lines by 2020. It says 12 other telcos are firmly committed to G.fast and G.fast News expects millions of G.fast lines to be deployed in 2017. It acknowledges that Broadcom and Sckipio “have established strong positions in G.fast and the Chinese [Huawei] are hopeful.” AT&T has said it is all but fully committed to using G.fast to supply high-speed broadband to MDUs, a market that almost every telco worldwide must be eyeing as shown by Windstream.
Most of Qualcomm’s revenue comes from the sale of chips that go into smartphones. However, most of its profit comes from the royalties it charges smartphone makers for using its cellular patents. A moderately successful Ikanos would not have added materially to Qualcomm’s revenues or profits.
Over the last five years Qualcomm’s revenues have gone $11 billion to $26.5 billion, mainly because of its sales of chips to the cellular industry.
In July 2015, the San Diego Union Tribune blamed Qualcomm’s recent slowdown in growth to “regulatory woes in China, increased competition, Apple’s iPhone market share gains and the lost sales of a key chip in Samsung’s latest flagship smartphone.
Qualcomm is pushing its chips into other markets such as smart cars, drones and health care. It also hopes to win Samsung back, has begun a $10 billion share buyback program, and settled its regulatory issues in China by agreeing to pay a $975 million fine.
This week Qualcomm said that its technology is powering Samsung’s brand new Galaxy Note7 in some regions where the Galaxy Note7 has Qualcomm’s Snapdragon 820 processor with an integrated X12 LTE modem, Qualcomm Adreno 530 GPU, Qualcomm Hexagon 680 DSP, and Qualcomm Haven, which is a secure foundation for eye-based biometric scanning. The Snapdragon 820 processor supports 4K video capture and playback plus offers support for slow motion video at 240 frames per second. It also powers the Qualcomm Aqstic audio codec, which provides suers with what Qualcomm called “impressive high-fidelity audio performance.” It also has Qualcomm’s Quick Charge technology.
The closure of Ikanos may be a minor event in Qualcomm’s overall strategy but it would end Qualcomm’s unexpected venture into fixed line broadband.
It might also signal a de-emphasis at Qualcomm on HomePlug home network technology – although HomePlug is still displayed prominently on Qualcomm’s Web site.
It is certain that Qualcomm wants to stay in the booming Wi-Fi market, which is growing rapidly – both in market size and in multiple new Wi-Fi technologies.
Wi-Fi is spreading to new markets such as smart homes, smart factories, smart cars, smart healthcare and smart cities. New more robust, more powerful versions of Wi-Fi could replace wireline home neteork technology because it’s easier to install. For example, mesh networking of Wi-Fi, which is only just now coming to market, could inexpensively and painlessly bring Wi-Fi to every room in a residence.
It is still unclear what impact the oncoming 5G cellular technology may have on wireline broadband.
If telcos use 5G as a “last mile” broadband technology instead of VDSL and G.fast over copper wires, as Verizon has said it is planning to do, the impact could be considerable. One of the largest markets for G.fast is turning out to be MDUs – fiber to the MDU and G.fast broadband over existing copperwires from the fiber to inside the residence. 5G could replace that over time.
Wireline fans say that wires are the most reliable method for transmitting the most data – but cellular continues to be improved at an accelerating rate. Qualcomm may have decided to bet on 5G, which has a much, much larger potential market than the market for last-mile broadband to the home that G.fast addresses.
Qualcomm may have decided to concentrate on its cellular and Wi-Fi operations rather than the wireline broadband business that came from its acquisition of Ikanos, whoce G.fast chips have been late to market.
The G.fast market and technology have taken longer to develop than some expected and Ikanos’ rivals Broadcom and Sckipio appear to have taken most of the orders in Europe and North America. Ikanos’ G.fast hopes may have faltered in Asia, where it was depending on selling a version of its G.fast chips to telcos that were using Ikanos’ …
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