IP-Enabled Consumer Electronics to Drive a $ 2.5B Connectivity Semiconductor Market by 2012 Print

SCOTTSDALE, Ariz. March 13, 2008 - MultiMedia Intelligence Brief- Semiconductor markets start getting serious attention when the market is measured in B’s, as in billions of US dollars. The market for semiconductors that enable Internet Protocol (IP) connectivity in consumer electronics semiconductors will soon cross this threshold.

With over 60 million IP-Enabled consumer electronics devices shipped into the market in 2007, the semiconductors that underlie this connectivity already represent over $560M in annual revenue, according to a recent report by MultiMedia Intelligence, entitled "Internet Protocol (IP)-Enabled Consumer Electronics: Internet Video & Digital Media to the TV." This semiconductor total includes the media access control or MAC, the physical interface or PHY, as well as related support chips. By 2012, as consumer electronics manufacturers and operators gradually add IP connectivity across a broad array of their equipment, MultiMedia Intelligence sees the market for the resulting network interface semiconductors to grow to nearly $2.5B.

Video game consoles still make up the largest percentage of IP-Enabled devices. This is more than just an idle connection. Based on consumer responses, over 5 million consumers play video games connected to the internet. And the internet connected consoles are reaching beyond gaming. In late 2007 Activision announced that it had sold more 2 million songs associated with “Guitar Hero” game through Xbox live over the previous five months. Now an increasing variety of TV-centric consumer electronics devices with IP interfaces is developing. Manufacturers are adding Internet interfaces across TVs, DVD equipment, as well as Cable, telco, and satellite set top boxes. These connections will not only serve as gateways to the internet, but also enable sharing of digital videos, music and images among devices within the home.

At the physical connection layer, there are multiple connectivity choices, including wired Ethernet, 802.11/WiFi, Coax and Powerline. These vary by geographic region and by box type. While there is vibrant competition to drive the market towards a favored connectivity technology, the reality is most CE devices will have multiple connectivity options.

The ubiquity and low cost of wired Ethernet will allow it to continue to be the most popular interface, as the de-facto standard in nearly all Internet enabled consumer electronics. Devices with other interfaces will likely still have at least one Ethernet connection as a default, as well as for testing or software installation during manufacturing.

Powerline and coax adoption will largely reflect geographic location. While coax has a time to market advantage for operator-centric video distribution and multi-room DVR, Powerline has a larger global appeal. Wireless will be used for connectivity with mobile devices, enabling direct Internet access and data transmission. Wi-Fi also may support non-linear or cached video.

Within the major physical connectivity categories, there is competition among standards. Multimedia Over Coax Alliance (MoCA) and HomePNA are vying for dominance in the Coax space, with HANA fighting for an entry point as demands of high definition drive higher bandwidth and quality of service requirements. Powerline alternative technologies include Consumer Electronics Powerline Communications Alliance (CEPCA), HomePlug and Universal Powerline Association (UPA).

The growing market for these network interfaces in catching a lot of attention from a growing field of semiconductor competitors. Competitors range from relatively focused and growing competitors such as Coppergate, DS2, Entropic Communications, and Intellon, to established competitors including Atheros, Broadcom, Conexant, Intel and Texas Instruments.

Some of these companies are demonstrating the rapid growth that demonstrates the growing opportunity in IP-Enabled consumer devices.

- DS2 saw a 229% increase in shipments to the US of its 200 Mbps chipset in the first half of 2007, albeit from a small base.

- Entropic Communications, which provides MOCA chipsets, saw revenue of $137.6 M in 2007, an increase of 103%.

- HomePlug chipset provider Intellon grew revenue 55% in 2007 to $52.3 Million. These kind of growth rates are becoming more difficult to find in the overall semiconductor market, making this an attractive market for new-comers and established companies alike.

 

This MultiMedia Intelligence Brief is based on the following research report.

"Internet Protocol (IP)-Enabled Consumer Electronics: Internet Video & Digital Media to the TV" analyzes the service providers, equipment vendors, content service offerings and technology in the multimedia-networked home. The report also looks at in-home connectivity including analysis and forecasts of Ethernet, Powerline, coax, and Wi-Fi integrated into consumer electronics. Other forecasts include worldwide subscribers for broadband, VoIP, cable TV, satellite TV, and IPTV. The associated set top boxes, adoption of network-interfaces by device type, as well as the middleware and interface semiconductors are also included. Device segments include TVs, DVD players and recorders, DMAs, video game consoles, media servers, DVRs and set top boxes.

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Rick Sizemore President 480-213-4151

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