Motorola to bridge cell phone chip standards

Motorola will begin selling a single cellular chip early next year that will work with all of the world's cellular phone standards, as well as be capable of delivering email and Internet data.

For consumers, the new DSP 56690 chip could mean an end to the aggravating network differences that prevent phones made for U.S. networks from communicating properly on the more advanced networks in Europe and Asia.

But for manufacturers, the benefit could even be greater. With one standardized communication processor, manufacturers will only have to design one phone for the world market, which should reduce costs and accelerate product cycles.

Eventually, Motorola sees the chip being used to allow handheld and notebook computers to access data via wireless Internet connections at speeds more than twice that of regular dial-up modems.

The idea for the chip arises from the patchwork cellular structure that exists today. Currently, different regions in the United States use incompatible types of wireless technology, rendering many cellular phones useless while traveling. The same is true of users who are roaming around the globe.

A chip such as Motorola's DSP 56690 could eventually allow for phone interoperability between different networks in different countries, noted Heather Henyon, a consultant with Strategis Group's international wireless practice. A user could, in theory, use the same phone in Europe, Asia, and the United States to make calls. But such benefits are limited to a small group of users, industry observers say. The main benefits will go to cellular phone handset makers--including Motorola, they say.

"There's really one certain subset of people who require international roaming," Becky Diercks, director of wireless technology research at Cahners In-Stat said. That group amounts to about 30 percent of all business travelers--a significant, but limited group.

The main benefit, according to Diercks, is in manufacturing the phones. That's because costs for both manufacturers and end users would be reduced by the use of chips such as those offered by Motorola. Product designers could use the same chip in an entire line of phones sold throughout the world, in contrast to today's highly fragmented design process.

Cellular handset sales are a booming business these days. Revenues reached $12.4 billion in the second quarter of 1999 alone, according to the Strategis Group. It's a business that Motorola has had to play catch-up in, but the new chips could potentially help the company get products to market faster and at a better price than competitors.

Motorola said it expects to start saving money on cell phone production by the end of 2000 through the use of the new chips.

The company won't limit use of the chip for its own phones, though. Competitors, including Nokia and Ericsson, its main rivals in the handset business, could decide to use the chips, and a number of Asian handset manufacturers have expressed interest in the product, said Omid Tahernia, general manager for Motorola's wireless communications division.

Nokia of Finland has turned itself into a highly profitable company by advancing state-of-the-art cell phones for sale in the various world markets. The company, which is the largest provider of cell phone handsets, relies on phones for about two-thirds of its revenue now. See related story.

"The majority of cell phone manufacturers are working toward the same goal," said a Nokia spokesperson.

Nokia designs its own chipsets but has not yet made any announcements regarding Motorola's newest chips. However, future arrangements have not been ruled out, she said.

Pointing to future standards
Motorola's chip can be seen as a precursor to further developments in the telecom industry. The industry is working on third-generation wireless technology, often called 3G, which will offer high-speed Internet capabilities and new voice services over mobile phones on a worldwide basis.

"When the 'world phone' finally comes to reality it is likely to have revolutionary effects on the economics of production and marketing of mobile phones on a global basis," said Megan Matthews, senior manager of corporate communications at Nokia.

With the ability to speed data along at up to 384 kilobytes per second in outdoor settings and up to 2 megabits per second in buildings, companies are even talking about offering the ability to view streaming video and audio on phones and handhelds.

The Strategis Group thinks that the corporate market will be a huge target for such services, with more than 32 million potential users for the higher-cost mobile data services, compared to the estimated 2.8 million workers who currently use such services.

There are a number of competitors working on chips in this field, including Texas Instruments, Philips Electronics, and Qualcomm. Qualcomm, for instance, is working with Ericsson to speed new devices to market.