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chipmonk
Amazon staying with OMAP makes sense but are their any limits to the ...
rick.merritt
I could see Amazon bringing on one or a part of one of TI's Omap design teams ...
Does Amazon want TI's OMAP?
Dylan McGrath
10/15/2012 2:51 PM EDT
Taking a page from Apple's book?
Amazon's relatively inexpensive Kindle Fire tablets, which feature OMAP applications processors, are increasingly seen as a pesky low price competitor to Apple Inc.'s iPad. But it would come as a surprise to many if Amazon took a page from Apple's book and moved toward vertical integration, including designing its own chips.
Carolina Milanesi, an analyst for consumer technologies at Gartner Inc., said she was skeptical of the report. Amazon's strategy is to make money on services, not hardware, she said. "As far as an integrated offering goes I think there are higher priorities when it vines to acquisition than not owning the silicon," Milanesi said.
Amazon's Kindle Fire and Kindle Fire HD tablets use OMAP applications processors. Amazon sells its tablets basically at cost in an effort to get more people buying content from Amazon. According to UBM TechInsights, the Amazon Kindle Fire, which retails for $159, carries a bill of materials of $148. Adding in costs for marketing and R&D, the firm roughly breaks even on each device sold, according to UBM TechInsights.
Strauss said a move by Amazon to acquire OMAP seems like a stretch. But he said Amazon is interested in expanding the Kindle product line and could also be contemplating developing its own branded smartphone.
Strauss and others believe that TI's decision to stop focusing OMAP on the smartphone and tablet markets stems from a trend toward integration of the applications processor and the cellular baseband. TI began gradually pulling out of the baseband IC business a few years ago and lacks the capability to pair OMAP with an advanced baseband.
Strauss said if TI did sell OMAP, it would likely be at a discounted rate. While product lines like OMAP might typically be sold for three to five times their annual revenues, TI in this case might have to settle for something lower, he said.
Roger Kay, a technology market analyst Endpoint Technologies Associates, said, assuming the report is true, Amazon must decide if whatever the purchase price for OMAP might be would be worth the added degree of control the company would get from owning its own chip designs and optimizing them for its products.
"Given that Apple is very nearly the benchmark for an integrated ecosystem, Amazon isn't that far behind in acquiring the pieces that you have to have to make a complete stack," Kay said.
Related stories:
Amazon's relatively inexpensive Kindle Fire tablets, which feature OMAP applications processors, are increasingly seen as a pesky low price competitor to Apple Inc.'s iPad. But it would come as a surprise to many if Amazon took a page from Apple's book and moved toward vertical integration, including designing its own chips.
Carolina Milanesi, an analyst for consumer technologies at Gartner Inc., said she was skeptical of the report. Amazon's strategy is to make money on services, not hardware, she said. "As far as an integrated offering goes I think there are higher priorities when it vines to acquisition than not owning the silicon," Milanesi said.
Amazon's Kindle Fire and Kindle Fire HD tablets use OMAP applications processors. Amazon sells its tablets basically at cost in an effort to get more people buying content from Amazon. According to UBM TechInsights, the Amazon Kindle Fire, which retails for $159, carries a bill of materials of $148. Adding in costs for marketing and R&D, the firm roughly breaks even on each device sold, according to UBM TechInsights.
Strauss said a move by Amazon to acquire OMAP seems like a stretch. But he said Amazon is interested in expanding the Kindle product line and could also be contemplating developing its own branded smartphone.
Strauss and others believe that TI's decision to stop focusing OMAP on the smartphone and tablet markets stems from a trend toward integration of the applications processor and the cellular baseband. TI began gradually pulling out of the baseband IC business a few years ago and lacks the capability to pair OMAP with an advanced baseband.
Strauss said if TI did sell OMAP, it would likely be at a discounted rate. While product lines like OMAP might typically be sold for three to five times their annual revenues, TI in this case might have to settle for something lower, he said.
Roger Kay, a technology market analyst Endpoint Technologies Associates, said, assuming the report is true, Amazon must decide if whatever the purchase price for OMAP might be would be worth the added degree of control the company would get from owning its own chip designs and optimizing them for its products.
"Given that Apple is very nearly the benchmark for an integrated ecosystem, Amazon isn't that far behind in acquiring the pieces that you have to have to make a complete stack," Kay said.
Related stories:
- Why OMAP can't compete in smartphones
- TI steering OMAP to embedded
- Teardown: Inside the Kindle Fire HD
- Teardown: Inside Amazon's Kindle Fire
- BOM bom bom...the Kindle Fire refresh!
- Intel cracks smartphone apps processor market
- Analysts clash over Marvell's rank among smartphone suppliers
- TI expands DLP technology into medical apps
- One in 10 smartphones returned
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GREAT-Terry
10/15/2012 11:45 PM EDT
I don't think Amazon has to design its own chip or buy in TI's OMAP! They are not Apple and they really won't need to care who own the processor!
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dylan.mcgrath
10/16/2012 2:41 AM EDT
I would agree. My initial reaction is that this doesn't make a great deal of sense for Amazon, but I do appreciate what Roger Kay says on page 2 of this story. Like everything else, it all depends on the purchase price. If they can get OMAP (or some portion of OMAP) for a song, maybe it makes sense. Otherwise, I don't know that it does. I am also not totally convinced that there really are advanced negotiations taking place on this.
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pelle
10/16/2012 8:42 AM EDT
Some years ago Nokia used to make their on SoCs and then suddenly decided to stop. At the time they annually sold about 400M phones and obviously reached the conclusion that it even at those volumes it did not make economic sense to keep designing asics. Also Nokia really excels at sourcing and logistics, that was never the problem.
From that I am quite convinced that there is very little reason for a phone maker to do custom SoC. The only reasonable explanation for Apple doing it is fear of getting cloned.
For Amazon to go that route is just ridiculous, they should drop Omap anyhow and look to MediaTek or Boxchip to cut costs even further.
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parity
10/16/2012 10:45 AM EDT
It may be all Amazon may want are the related TI OMAP patents for its portfolio. Amazon could then just use the same foundries that TI uses to build the chips/revisions.
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rick.merritt
10/16/2012 7:14 PM EDT
I could see Amazon bringing on one or a part of one of TI's Omap design teams and doing some custom work in house while TI still has enough resoruces to push Omap in various embedded markets.
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chipmonk
10/17/2012 11:52 AM EDT
Amazon staying with OMAP makes sense but are their any limits to the architecture that would limit its growth in future ?
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