NEW YORK –Broadcom’s recent $86 million acquisition of Percello sends three key messages to the broadband and cellular markets: It validates the fledgling femtocell market; it presents a very plausible scenario for femtocell integrated in a broadband gateway box; and it shows the future of femtocells potentially priced on par with WiFi.
The industry is certainly not there yet. Broadcom would be first to acknowledge that it will still take a few more years for the various plots to thicken.
But at the very least, Broadcom’s entry in the femtocell market verifies that the demand for femtocells is real, here to stay, and no longer the emerging field attractive to only startups such as PicoChip and Percello.
This deal “should take uncertainties out” of carriers worried about the staying power of small companies supplying femtocell chip solutions, noted Greg Fischer, vice president and general manager of Broadcom’s broadband carrier access line of business, in an interview with EE Times.
Fischer explained, “Every carrier has its own rationale and need for femtocells.” While AT&T and SoftBank are leading the way, others are watching carefully what’s working and what’s not working, he added.
While Broadcom takes the long view on the evolving femtocell market, the fabless chip vendor appears well positioned to take advantage of the relationship Percello has already cultivated with Ubiquisys.
Will Strauss, president & principal analyst at Forward Concepts, said, “Percello's biggest customer is Ubiquisys, which is probably the number one in femtocells, shipping in some volume to AT&T, SoftBank and SFR (in France).” Strauss believes Broadcom could “instantly become a leader in the femtocell market.”
Indeed, earlier this year, ABI Research named Ubiquisys the number one femtocell access point vendor. ABI, at that time, also noted the successful transformation of Ubiquisys from a box vendor to femtocell software supplier.
Broadcom’s Fischer made it clear that the initial opportunity for Broadcom is a standalone femtocell market. “Just like a WiFi access point, I see femtocell as a 3G access point,” said Fischer.
Given Broadcom’s strong presence in DSL, cable modem and cable boxes, coupled with the company’s corporate credo (“integration, integration, integration”), industry analysts agree that Broadcom is the most credible company to succeed in integrating a femtocell in another box.
Linley Gwennap, founder and principal analyst of The Linley Group, about a month ago, told EE Times: “The ultimate way to bring down the cost of femtocells is to integrate the femtocell into another box, such as the broadband gateway.” Gwennap added, “A carrier such as AT&T could do this by adding a cellular chip into its wired/wireless DSL gateway and route cellular traffic onto its DSL network.”
Gwennap, then [a month before this acquisition was announced], correctly predicted, “The incremental cost of the femto function would be around $10. This could ultimately require the femto processor to integrate Ethernet and Wi-Fi as well as DSL or cable-modem. Broadcom is the obvious company to develop such a chip.”