Convergence Is Finally Here

Jim McGregor (Source: In-Stat)

For years, we've heard about the impending convergence of computer, communications and consumer electronic devices, but it seems the stars are finally aligned to produce a new generation of devices that offer a wider range of features and performance. The reason these so-called convergence devices have been slow to materialize is a result of the complexity of the market, which includes the impact of new technologies, consumer usage models, considerable competition, and essential infrastructure and services. Not all segments of the market necessarily require devices that combine multiple functions, such as the home and office. Although the lines between devices in these environments are blurring, the metamorphosis is much slower than within the critical area of the mobile consumer. The mobile consumer will seek to combine multiple functions into a few devices — if not one. The first signs of the transition are still evident as cell phones added digital cameras and PDAs added video, but the next generation truly bridges the gap by providing the same or similar experiences to the mainstream standalone devices. So, what has changed?

The key drivers are the combination of new technologies and new usage models, or what In-Stat refers to as market inflection points. Technology alone does not drive demand, it just enables it. When technology is used to enable an alternative usage model that offers added benefits, such as ease of use, the usage model will drive demand. The market is already encountering many of these market inflection points, such as the combination of MP3 technology for audio playback, with the shift from using physical media, such as a disk or tape, to virtual media, which is content that is electronically acquired, transferred and stored. Several key technologies will become key enablers: wireless point-to-point interfaces, such as wireless USB or IP over ultra-wideband; long-range wireless broadband communications; and voice-over IP. These technologies, in conjunction with evolving usage models, such as mobile entertainment, the portable office, and the sharing of digital information, will drive the move to new mobile convergence devices.

The first wave of convergence devices, like the smart phone and ultramobile PC, leave much to be desired, but they are the first steps in product evolution and market development that future semiconductor growth will build on. To understand the true potential of converged devices, consider that unit shipments of mobile electronics were close to 1.05 billion units in 2005, and are forecasted by In-Stat to increase to more than 2.16 billion units in 2010. Although the emergence of the true convergence device could theoretically reduce this total figure, In-Stat believes the impact on the total number is minimal over the next decade, because standalone devices will still be prevalent in the cost-sensitive segments of the market. The effect on semiconductor demand and technology, however, is dramatic.

The most prominent of three factors influencing future semiconductor design will be power consumption. It is a significant challenge to provide increasing functionality, like that of a PC, while maintaining eight or more hours of battery life. As the PC market pushed transistor design to increasing levels of performance, this new generation of convergence devices will create a need for new materials and increased power efficiency in transistor design and semiconductor manufacturing. The second key factor will be the physical size of semiconductor components. Die stacking is already a common method of achieving higher levels of memory density, but combining stacked logic and memory into the same package to reduce size while increasing memory performance will also become more common. The final factor will be logic complexity, as each manufacturer seeks to increase the performance and functionality of its device. This complexity must also be paired with more modular designs that allow individual functions to be powered up or disabled for improved power management. The same factors influencing the trends in semiconductor design will also place an increased emphasis on tools capable of validating complex solutions, as well as a push to use the latest in manufacturing process technology.

The system architecture itself also faces many challenges, since there will not be one size that fits all users or usage models but rather a plethora of new electronic devices all in search of the right balance of features for each market niche.

The new convergence devices will also create a new challenge in supporting communications and services infrastructure to handle more data from more sources than ever before. This demand, however, combined with strong competition from traditional as well as new market entrants, will overcome technical limitations and market obstacles. Increased demand will also lead to a new round of vendor positioning and possible consolidation throughout the value chain.