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In $2.5B Deal, Qualcomm & CSR Mesh

By 10.15.2014 0

MADISON, Wis. — Qualcomm Inc., the world’s largest cellphone chip vendor, has agreed to buy CSR for ₤1.57 billion ($2.5 billion) to strengthen its presence in the Internet of Things.

CSR, a pioneer in short-range Bluetooth-based wireless connectivity, develops voice and audio processing tools used in portable, automotive, and wearable devices. Most recently, it devised CSRmesh, a Bluetooth-based mesh technology described by some observers as a potential ZigBee killer.

Qualcomm would pay 900 pence ($14.37) a share for CSR, a 56.5% premium on the share price before the start of the offer period in August. The all-cash offer was announced Wednesday just hours before a deadline imposed by UK regulators for Microchip Technology to mount a fresh bid for CSR.

In August, Microchip disclosed that it was negotiating a deal with CSR. However, CSR rejected Microchip’s overtures, saying its offer was too low. (That price was not disclosed.)

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Qualcomm’s $2.5 billion offer could trigger other bids for CSR, now that a firm price is out in the open. However, financial analysts appear to believe that only a handful of semiconductor companies could afford to complete with Qualcomm.

Qualcomm looks beyond mobile
Dan Ridsdale, an analyst at Edison Investment Research, called the move “a surprise offer” in a research note. “The offer was unexpected because Qualcomm acquired connectivity technology through the 2011 acquisition of Atheros.”

However, Atheros’ technology has mainly been embedded in mobile handsets alongside Qualcomm’s radio and processor solutions, he wrote. “With growth in the smartphone market running out of steam, Qualcomm needs to look for new avenues of growth, and CSR provides this connectivity technology for the plethora of devices which require connectivity to participate in the ‘internet of things’ mega trend. CSR’s indoor location technology may also be of interest.”

Ridsdale agreed with other financial analysts that, “given that the offer is recommended and that other players are unlikely to be able to match Qualcomm’s firepower, we see a counter offer as very unlikely.”

CSRmesh at play here?
The marriage between the dominant global mobile chip vendor and CSR, which has a solid track record in pioneering Bluetooth technologies focused on cellphones and connected cars, seems like a good fit.

If the deal goes through, CSR would gain immensely in scale while fighting off the danger of obsolescence posed by competing chip vendors integrating Bluetooth technologies into their SoCs.

Classic Bluetooth and Bluetooth Low Energy chips are quickly getting commoditized, but CSR is a pioneer of the short-range wireless technology and is now pushing CSRmesh, a ZigBee-like mesh technology built on Bluetooth. CSR sees CSRmesh as a linchpin for its foray into the IoT market.

“CSRmesh is a proven technology that allows for an almost unlimited number of Bluetooth Smart-enabled sensors, beacons, and other devices to communicate in a mesh network and be controlled directly from a single smart device for the first time,” Rick Walker, marketing manager for IoT at CSR, recently told us.

He stressed that CSRmesh isn’t a separate protocol from Bluetooth Low Energy. “It actually is a software layer that sits on top of it to extend the possibilities of Bluetooth Smart communications.”

While acknowledging that CSRmesh isn’t standardized yet, Walker said that a Bluetooth Smart Mesh group has been established in the Bluetooth Special Interest Group. “Our goal is for the community as a whole to be able to take advantage of CSRmesh capabilities to improve the IoT.”

In theory, Qualcomm could become a much needed ally for CSRmesh.

Meanwhile, Qualcomm also is keen on establishing itself on the IoT market. In May, it agreed to buy Wilocity, a maker of wireless HDMI connections. Qualcomm developed AllJoyn, an open-source platform designed to let devices to share information with other nearby devices.

— Junko Yoshida, Chief International Correspondent, EE Times Circle me on Google+

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Jessica Lipsky   2014-10-15 13:55:23

In the ever-broad Internet of Things, what kind of connectivity is missing? Will this deal finally close the gaps - whtever they are?

junko.yoshida   2014-10-15 14:03:30

The IoT story, obviously, is far from over. 

But when it comes to connecting a lot of devices together in a mesh network, there is obviously, a)ZigBee (an important element of IoT); b) CSRmesh mentioned here in the story; and b) don't forget that Google's Nest-led Thread Group recently unveiled Thread's IP-enabled low-power network, its protocol and software stack -- whose development was spearheaded by Silicon Labs -- that can run on today's 802.15.4 products (which will be upgraded via software).

Max The Magnificent   2014-10-15 14:17:09

@Junko: But when it comes to connecting a lot of devices together in a mesh network, there is obviously (a) ZigBee ...

Hmmm -- ZigBee offers all of the advantages you might expect from something that is being designed by a committee -- it's now pretty bloated at 120+KB and it's really not as easy as one might like to use it to deploy and comission a wireless mesh network.

There are other contenders. One of my personal favorites is SNAP from Synapse Wireless -- this has a stack of only ~40KB -- and that includes a Python Virtula Machine, thereby allowing you to create your applications in Python and download them into the wireless node(s) "over the air".

Check out my blog from a couple of years ago for more details: IPv4, IPv6, The Internet of Things, 6LoWPAN, and lots of other 'Stuff'

junko.yoshida   2014-10-15 15:35:37

Thanks, Max, for taking time to give references to our readers on alternatives. I agree. There are a lot more options than those I mentioned in my comment.

The name of the game now, though, is how to introduce IP-based protocols, which are NOT bloated as you mentioned, and that can work well with already ubiquitous wireless network. It's not the lack of technology, but I see the issue more as a lack of business "will" and momentum.

 

alex_m1   2014-10-15 19:31:19

@Junko:

 

> I see the issue more as a lack of business "will" and momentum.


True. But it does create an interesting competion between different business models, with interesting ways to reduce the "will" needed , which is really the problem:

Iotera is selling people long-range  mini basestations(the wifi model) with a properitary in order to build a a "free"(so they claim) national network.

Sigfox is using carriers model, with long range basestations , that are cheap and get big coverage areas - in order to decrease monthly connection costs by 10x(or so they claim) over 3G and support low power.

Semtech sells LoRa long range IOT chips ,so with this tech availble(which BTW i think cisco and ibm are using ) , i'm sure someone will come with  interesting business models.

Bluetooth mesh as you know is using the fact that there's already bluetooth at every phone to remove the need for people to install a gateway(which means cost and complexity) with the hope that people will deploy enough such devics at their home to get a full home coverage(while the mean time offering better control).

There was also an effort by the cable companies(and google's nest) to install zigbee gateways at the home to get some control over the user's home and purchasing.

Currently , th best looking one(in minimal will needed) is iotera , in my humble opinion.

rick merritt   2014-10-15 19:46:59

@Alex: Why do you like Iotera?

junko.yoshida   2014-10-15 19:51:50

@alex, thanks for your informative comments here. I will check out iotera. 

Beyond business "will," another thing we need to consider is how IoT will be applied to our everyday life, or better yet, what exactly we want IoT to accomplish.

If our end-game is to turn on and off all the lights in a house, installing Bluetooth chip for every light bulb doesn't exatly make sense. ZigBee will do the job. But then, ZigBee in the current form doesn't do IP for home appliances. (Hence, Google Nest's proposal on a new ZigBee-like protocol)

But if we are talking about control over bigger appliances (set-tops, PCs and other entertainment systems), WiFi will do the job fine.

I am not saying that there has to be a single wireless protocol -- but I do see a lot of posturing is going on right now within the industry.

 

 

 

Nando Basile   2014-10-16 11:40:18

@ Junko

About bulbs, I'm afraid thinks are a little bit more complex.

ZigBee has a quite heavy stack and if you try to install Zigbee for each light bulb you'll understand why Qualcomm is going BTLE-mesh instead...

Zigbee is suited for up to 65k sensors by IpV6 and you can configure routers to cover a large surface. When it comes to smart building, smart factories, smart greenhouses, smart bridges, smart ...large surfaces, then you may get a fair ROI out from all the network set-up complexity. Aslo, ZigBee pays a lot for security, but becomes more power hungry and nodes battery life can be affected vs, say, BTLE

For domotics, sorry to say, but I stay convinced ZigBee is not in pole position, as it simply overshoots the need. Big appliances will use WiFi (perfectly agree with you) but others may use BTLE or even move away from 2.4GHz solutions (it will require more and more bandwith to ensure data integrity vs. packet collision), maybe turning to EnOcean or Dash-7 at sub-Ghz frequencies.

Last but not least, if you decide to stay at 2.4 GHz and connect bulbs not by ZigBee but rather by BTLE, sure you will find a nice app on the Apple store  or Google play to get them working from your smartphone: because the advantage of BTLE is that probably you already are carrying a BTLE radio in your pocket right now or will be in next months... :)

Qualcomm is a leader in BTLE solutions, we can perfeclty undestand their move

alex_m1   2014-10-16 13:54:46

@Rick:


Two reasons why i think iotera will sucseed(with the exception of maybe LoRa, depending on business model):


1. I look at the other long range competitors and i see very low coverage rates. Even sigfox which is only in a few cities. So my guess it would take a long time to deploy them fully. On the hand, just with a single kickstarter , iotera got a nice spread of their network , at least according to their site. So it does seem  to work faster.

2. I look at the incetives and they align nicely for the iotera ecosystem:

* Say you're an IOT OEM: For you it's important that everybody could use your product fully. So low coverage decreases you market share , and solutions like bluetooth mesh offer only a partial solution because of distance limitation and dependnce on other bluetooth mesh products around the home. And such partial solutions increase complexity - and lead to worse reviews, the killer of products.

On the other hand , with iotera , either there's already an iotera basestation near(and the user can verify that with an app - or even using something integrated in the ecommerce shopping process) so the user doesn't need to spend extra money, or worst case , the users spend little extra money and get a basestation.

Ah, and iotera claims the service will be free(not sure how, but maybe their business model is selling chips ?) , so also very good for the OEM.

* Say you're an IOT user: If there are no basestations in your area, usually means you're an early adopter. Ealry adopter are usually willing to pay a bit more, so buying a basestation is no problem. And now you've covered a radius of 1-4 miles, i.e. your neighbourhood. 

Also , having your own basestation means your devices will use less power and need less battery replacements. for some users(more technical) this may be a good enough reason to buy their own basestation and spread the network and help everyone lower their power consumption.

And of course this doesn't prevent communal or business spreading those. For example there was a story in eetimes about a startup adding IOT to heaters in new york. Iotera  sounds like a good solution for them, and on the way they spread IOT connectivity.

 

tb100   2014-10-16 14:46:25

My first-glance impression of Iotera: A handful of basestations to cover a city for tracking and low-data rate monitoring. Since the datarate is low, you don't need the same number or complexity of basestations that a cellphone company implements.

The thing is, the cellphone companies are covering the cities anyway. Iotera's competition is LTE. All I can say is good luck with that.

alex_m1   2014-10-16 15:51:17

@tb100

If that was the case, 3G would have already won.

But LTE chips(at the client) like 3G chips are much more complex, power hungry and expensive than IOT solutions, and they also demand monthly payments. Basically , not a good fit.

tb100   2014-10-16 16:34:36

The Jivi JSP 20 Android smartphone is available in India for $30. That includes GPS. Now take out the touchscreen, Bluetooth, and much of the Flash/DRAM and the price is a lot lower. There's no reason an LTE chip has to use more power than any other long-distance radio. And the phone companies already charge a lot less for low-data rate IoT services. For example, Kindle e-readers attach to the cellular network, but users don't pay anything to download books.

alex_m1   2014-10-17 02:25:25

@tb100, Again , totally different requirement. Many IOT devices needs(say various sensors) to last at least 6-12 months on AA battery, radio should cost $1-2, and monthly bandwith costs should be low as possible, because every cent count in that market.

Nando Basile   2014-10-17 03:41:23

Sorry, I don't buy.

Iotera solution is a single application based on GPS tracking. GPS needs energy, a battery can last for max 4 months, they claim. Then either you change it or you resign to lose your pet.

When you target ultra-wide areas, as Sigfox wants to, and deploy UNB, you are targeting a class of fixed sensors like environmental sensors, spreading across low-connected areas. You are not tracking them (even if this is a possible use as well), but mostly interested in collecting their data across the day. The larger the area, the more the sensors you can put inside. Think about a forest, or a farmyard, or a large urban environment, or off-shore. Then the limit is the battery: you don't want to save money with your ISP in collecting the few bits you need and spend one thousand more to get batteries replaced. For these scenarios, batteries must usually last 10 years or more. Or you prefer to go batteryless.

So, at first it is difficult to compare Iotera (a particular application) with SigFox (a network service project).

At second, and coming back to Qualcomm, the BTLE choice looks mainly impacting Zigbee, limited to smart-home applications. Iotera or Sigfox have very few to do with it, because they are simply not conceived to address this market segment.

alex_m1   2014-10-17 14:11:54

@Nando,

It's true that the current entry point for iotera is GPS, probably due to marketing. But they are very new. But it is not the goal. their goal is to spread a communication network fir for the IOT.look for an article called "A Clever Plan to Build a Nationwide Network for the Internet of Things" if your interested in that.

Second,sure,  sigfox is better for rural areas , where iotera doesn't work so well. But at least when considering the consumer side of the IOT(with most consumers living in urban and suburban areas) , iotera's model could  work well technicaly and business wise.

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