Sitting in the Digitimes office last week, GPS IC design house Sirf founder Kanwar Chadha took out an idea book that he had commissioned back in 1995 when Sirf was just getting started. "You have to remember, at that time there really was no established market for GPS devices," explained Chadha. "Therefore, I had to hire a designer to work with me on this book to draw up scenarios that we thought would be ideal for GPS."
Page after page in the book reveals the prescience of Chadha and Sirf. There are drawings of PNDs, telematics systems, walkmans and watchmans – all with accompanying text describing how GPS can be integrated into such devices and how location-based servies will make our lives much easier and safer. Chadha then breaks into a story about going to Disneyland and being one of the first people to arrive. He parked in an empty parking lot early in the morning but when he returned at the end of the day, there was no way to tell where his car was among the ocean of 30,000 other cars in the parking lot. While the point of the story is that this is yet another example of how location-based technologies can step in to make your life easier, it also serves as a metaphor for the recent state of affairs for Sirf in the market.
The company was the first to take GPS to the masses, and was a main driver in bringing costs of navigation devices from a US$3,000-4,000 range to affordable levels. However, while Sirf was among the first to enter the market and has played a leading role in the growth of GPS-enabled devices for many years, a flood of competitors has steadily chipped away at the company's market share and the company's stock price dipped below US$1 earlier this year. The parking lot (market) is now full of competing players and it can be argued that Sirf has been looking for its proverbial car for about the past year or so.
One challenge the company has had to face is the spread of GPS radios to devices that are not primarily designed for location. Chadha describes these devices, such as digital cameras and handsets, as having location merely as an attribute. In these devices, GPS is but just one type of radio that makers are looking to integrate. Other types of radios such as Wi-Fi, Bluetooth and FM receivers are also being integrated into the devices, which means designs that can incorporate all the radios into one solution have an advantage. As a GPS specialist, Sirf found itself losing ground, especially in the handset space, to players such as Texas Instruments (TI) and Broadcom that can deliver complete solutions bundled together.
Perhaps recognizing this, Sirf and CSR, a Bluetooth market leader, decided to combine forces by merging earlier this year. The paperwork on the deal has slowly been processing – Chadha noted that the SEC recently approved the proxy filing for the merger – and a shareholder meeting is scheduled on June 25 to receive final approval on the deal. The merger should close this month, Chadha stated.
Chadha voiced confidence about the role a stronger Sirf can play in the market for these types of devices, based on the expertise of Sirf and CSR. For devices where GPS is only an attribute, the key to implementing GPS is to make it easy, stated Chadha. Combining radios such as Wi-Fi, Bluetooth in an intelligent design improves the experience for the user, and this is an area of strength for the company. GPS is very sensitive so innovation will also be required to provide optimal co-existence of all these radios. The companies that can innovate in that space will be winners, Chadha stated.
In addition, one type of solution cannot satisfy every customers, he noted. If an attach rate is 100%, it may make sense to combine all the solutions. But if Bluetooth has an attach rate of 80% and GPS has an attach rate of 50%, then you will continue having discrete solutions, and Sirf and CSR both hold leading positions in their respective markets.
Chadha highlighted the importance of technology leadership by pointing out that every industry goes through the same process. In the beginning there are only a few products so customers are willing to pay more. Then the product becomes a commodity and people are not willing to pay anything for it. Ultimately though, customers realize that cheapest is not the best. At that point people are willing to pay more to get more. One key development moving the GPS market to the next level is that mobile handset service providers are now learning how to monetize location-based services, and therefore they no longer want to compromise on their GPS solution. Sirf is still the platform of choice for GPS, Chadha argued, and the company is getting requests from clients to specifically include Sirf technology in their devices.
While location-attribute devices are adding GPS as a feature, Chadha indicated that Sirf is also focusing on extending the reach of location-centric devices such as PNDs and automotive telematics solutions. These devices would not exist without location-based services, but Chadha stated that more functionality is being added to these devices, specifically in the form of entertainment.
Last year the company launched its SiRFprima platform to satisfy demand for entertainment applicaitons on location-centric devices. The chip includes an ARM11-based multifunction processor, location engine, on-chip DSP and hardware-accelerated 3D graphics engine and was targeted for multimedia devices priced in the US$500 range. Sirf then filled out the product lineup this past month by launching its SiRFatlasIV solution that targets PND-centric devices in the US$100 range. Chadha stated that SiRFatlasIV will support applications that do not need much 3D visualization and feature a smaller screen size. Mobile DTV solutions are expected to drive sales initially with some navigation solutions expected as well.
Chadha pointed out that mobile TV integrated into PND solutions is very popular in emerging markets, while adding that a PND that doubles for a mobile TV does not necessarily have to be viewed in-car. The most important thing for growth in this area is delivering an out-of-box experience, Chadha stated. People do not want to sign up for, or have to pay a subscription fee to get mobile DTV. In markets such as Korea where you can simply turn on a device and start watching TV, Sirf has had great success, Chadha indicated. And with the emergence of free-to-air low-power mobile DTV solutions, SiRFatlasIV-based devices will be extremely popular, he predicted.
Are these developments enough to get Sirf back in the driver seat? Chadha believes that there is still a long way to go for all GPS players in tapping the potential of location-based services and technology so Sirf still has a lot of work to do. Chadha mentioned making location work everywhere, including indoors, which is becoming increasingly important as location-based services start to take off. These services will mostly target consumers who have little tolerance and are very binary in their decision making – it either works or it doesn't – so a 90% success rate is still not good enough, Chadha stated. Power is also an area that needs to be explored. Ultimately, location-centric devices need to become wearable, and how often do we need to charge our watches, Chadha stated. We are almost there for handsets and we can prove it in the next generation of products, but we are a long way from there, Chadha said, pointing to the picture of a watchman in his book.
