The Bluetooth market has reached a stage of maturity at which commercial realities must now be addressed by developers, say analysts Frost & Sullivan in a new report.
“Whereas once Bluetooth was hailed for its ‘get-rich-quick’ potential by start-ups, only those companies with a sound business plan and a clear value proposition are equipped for survival,” notes the firm.
Nonetheless, a stable specification and installed base that runs into millions of units is proof that it has been a success. Even critics would be hard-pressed to name any other wireless technology that has managed to achieve the volumes and diversity of deployment of Bluetooth in just six years.
According to Frost & Sullivan, clearly identified market segments such as mobiles and PC-based applications offer substantial market growth, whilst emerging application areas such as industrial and automotive applications will grow in importance and volume as time goes by. There are no clear competitors to Bluetooth in the personal area networking space, and while there may be other new technologies on the fringes of its range, none have its scope, volume or maturity, says the firm.
In 2001 shipments totalled just under 10 million chipset solutions, while annual shipments had more than tripled to around 34 million units by 2002. In 2003, the company expects that shipments will at least double, with a conservative estimate of over 70 million units. If the industry ramps up production in the second half of the year, this value could be significantly higher.
However, the report concludes that it has not all been plain sailing for companies operating in the semiconductor and subsystems space. “Tough economic conditions and the resource demands of a challenging technology have forced a consolidation of the market,” reports Frost & Sullivan Consultant Carlos Ferreiro “Developers no longer jump on this bandwagon, they jump off it when they realise there is no easy money to be made.
“For many of the smaller, early developers of the technology, whether hardware or software centric, there was a clear belief that large returns could be achieved for modest investment and some who executed their exit strategies early found this to be the case,” Ferreiro explains.
Some of the larger initial Bluetooth players, however, have found the returns achievable from Bluetooth to be too limited to justify continued significant involvement, says the analysis firm. Companies such as Avaya, Intel and Motorola have all scaled back their initial interest as the technology changed from being the “world changing technological advancement” it was heralded as to a more realistic breakthrough in personal communications and networking.
Most major developers, such as Cambridge Silicon Radio, have based their success on technological innovation and a strong development support for customers. But as those customers in the major application areas become more comfortable with development, it is price that will emerge as the determining factor.
Over the next few years, Frost & Sullivan expects to see a further streamlining of the component end of the Bluetooth market, and semiconductor developers, protocol software developers and intellectual property developers are already feeling the contraction. According to the firm, the growth opportunity lies in emerging applications, but only those able to demonstrate competence in supporting client development will win.