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The May 14, 2003 Issue Provided by System Dynamics Inc.
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Broadcom - Today the Laptop, Tomorrow the TV?

With all the buzz about Wi-Fi and wireless networking, it's easy to get swept up in the excitement. It's certainly been true that this has been one of the few bright spots in an otherwise depressing and depressed telecommunications environment. Semiconductor companies are the starting points for the products and services of tomorrow and so it's always interesting to understand where they are placing their resources and their rationale for doing so.

Broadcom is one of the leading players in chips for broadband access and networking. Their chips go into cable and DSL modems, digital cable and satellite set-top boxes, home gateways, and many types of home networks including Ethernet and Wi-Fi. We visited with Broadcom to discuss wireless networking in general and 802.11g in particular. We met with Jeff Thermond, VP and GM, Home and Wireless Networking Business Unit, and with Jeff Abramowitz, Senior Director of Marketing.

802.11g and "54g"

As many readers know, 802.11g is the latest version of the IEEE 802.11 standard, providing up to 54 Mbps at 2.4 Ghz. 11g products are fully back-compatible with the very popular 802.11b "Wi-Fi" products, and can operate together in mixed networks. The earlier 802.11a standard provides the same speed as 11g, but is not compatible with 11b, since 11b and 11a operate in different spectrum (2.4 GHz and 5 GHz, respectively). We believe that 11b will fade out in favor of 11g and dual-band 11g/11a systems.

802.11g is not yet an approved standard--final standards approval is expected in the next few months. We expect the Wi-Fi Alliance to start certifying 11g products and applying the "Wi-Fi" logo shortly after the standard is ratified.

Broadcom decided not to wait for the standards process to be completed, and released a pre-standards silicon solution into the market late last year with the name "54g". Many companies have now brought 54g-based products to market. These include home networking products--routers, access points and LAN cards--from Linksys, Apple, Belkin and Buffalo; and notebook PCs from Compaq/HP and soon from Dell.

54g wireless access point and broadband router --> Click for larger pictureBroadcom's aggressive strategy appears to be paying off. In March it announced that it had shipped more than three million 54g chips since starting production in December 2002, and Linksys--the leading provider of wireless LAN products--reported that its sales of 54g products approached 802.11b sales in February.

This strategy is not without risks. Broadcom has said that its "54g" solution has enough built-in flexibility that pre-standard products can be upgraded to the final standard with a firmware download, and Thermond and Avramowitz are still confident of this. But this claim won't be proven until the standard is ratified and full interoperability testing is completed. Of Broadcom's 54g customers, only Buffalo explicitly assures buyers that "if the certification materially changes the principal operating features of our pre-standard 802.11g products, we will replace or upgrade any of those products at no charge."

Next Steps for Wireless

Jeff Thermond believes that "dual-band tri-mode" products--supporting all three standards--will eventually dominate the market. These mature products will include the full QoS and security standards--being developed by the IEEE 802.11e and 802.11i working groups--which are now expected to be completed in early 2004.

Pending completion of these standards, the Wi-Fi Alliance has released an interim security specification called WPA (a subset of the draft 11i standard) and will probably do the same for QoS. Existing 54g-based products should be upgradable to these interim specifications with a new firmware download--Broadcom reference designs were among the first products to receive Wi-Fi certification for WPA. Thermond believes that the chip has sufficient processing power to handle the requirements for the full specifications.

The 54g strategy is just the start of Broadcom's plan to position itself as one of the long-term leaders in the wireless business. Broadcom believes that wireless networking will be embedded into many products -- from home gateways and game players to portable phones and TV sets.

Thermond said that Broadcom's strengths lie in integrating many functions together to create systems on a chip, and that 11g and eventually 11g/11a will become a core component in single-chip designs for low-cost consumer devices. He predicts that as the market shifts from networking devices to consumer products, Broadcom will be one of the winners with low-cost fully-integrated silicon solutions.

Our Testing

We have recently received networking products based on Broadcom's 54g chips from Linksys and Buffalo, and are testing them as part of our comprehensive 802.11 home networking test. We hope to report on these devices in the next issue of our report.

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