Electronic Design

Communications: Cell Phones

Waffling Cell-Phone Market Will Rely On Upgrades

The cell-phone business finally topped the PC business in semiconductor purchases, making it one of the largest—if not the largest—segment within the semiconductor arena. Yet the cell-phone market has flattened over the past two years. Just over 400 million phones were sold worldwide last year, with modest growth projections of 7% to 10% (mostly from Asia) for this year. U.S. and European cell-phone markets are essentially saturated. The latest quarterly figures show that Nokia is still in the lead with a 35.9% share of the handset market. Motorola is second with 16.7%. Surprising everyone, Samsung moved into third place with an 11.5% market share. Fourth place goes to Siemens, with Sony Ericsson way down the list.

However, there's a healthy replacement and upgrade market. The carriers would like to think that their 2.5G data services are really catching on, but that does not seem to be the case. Despite the wide availability of new services like e-mail, short message service (SMS), Internet access, games, and even multimedia downloads that are now available in most major markets, most subscribers are saying that the prices are too high and the installation and configuration too complex.

Subscribers seem to be going for the much smaller color-screen phones with better battery life. They look "cool," and many have built-in digital still cameras that enable the exchange of color photos. Many are clamoring for better reliability and coverage instead of frivolous offerings like e-mail and Internet access via an alpha-less keyboard handset with a 2-in. screen.

All of the new handset features, such as data transmission, E911 capability, and color screens, are further challenging the designer with the need for much more memory and greater power consumption. Memory and power-management IC manufacturers seem to be on top of this, as the volume potentials are very alluring.

Despite its current absence, 3G will eventually make its presence felt. 3G activity is nearly dormant in the U.S., but there's movement in Europe. Japan and Korea have adopted 3G to some degree already. Newcomer China is still trying to make up its mind between the GSM to W-CDMA path, cdma2000, or the country's own unique brand of 3G called time-division (duplexed) synchronous CDMA (TD-SCDMA). Whatever the technology, the market is huge.

In the meantime, carriers will experiment with new data services and make system upgrades with multimode basestations using software-defined radios (SDR). They'll also add the E911 capability and install smart antennas to build capacity and prepare for 3G.

TOP TEN
>2.5G SYSTEMS AND SERVICES will march on. With 3G systems and handsets on hold, carriers are investing in 2.5G data technologies like General Packet Radio Service (GPRS) and Enhanced Data for GSM Evolution (EDGE) for GSM phones, as well as in 1xRTT and 1xEV-DO for cdma2000. No killer data app will be found for 2.5G or 3G.

>3G WILL EVENTUALLY ARRIVE. With its potential for 2-Mbit/s data rates, 3G will show up first as the 2.5G extension GSM/EDGE and cdma2000 1xEV-DO. Yet 3G will arrive in some form of code-division multiple-access (CDMA), whether it's the primary wideband CDMA (W-CDMA) favored by Europe, the newer time-division (duplexed) synchronous CDMA (TD-SCDMA) supported by China, or an advanced form of cdma2000. W-CDMA systems won't emerge in the U.S. until 2005.

>THE SOFTWARE-DEFINED RADIO (SDR) will enjoy greater use, solving some cell-phone problems. But as ADCs get faster, the DSP section of SDR moves closer to the mixer and the low-noise amplifier (LNA). Powerful DSPs with low power consumption offer the benefits of implementing handsets as well as basestations with multiple modes, bands, interfaces, and standards in software, which can ultimately be upgraded with software downloads.

>SPECTRUM WILL CONTINUE BE A PROBLEM in the U.S. The FCC recently provided additional space in the 1.7- and 2.1-GHz range for 3G, but more is needed. The FCC's Spectrum Policy Task Force offers some potential solutions, such as the timesharing of marginally used spectrum and SDR technologies.

>E911 SERVICES WILL COME ONLINE, with GPS emerging as the superior solution. Some carriers are replacing Enhanced Observed Time Difference (EDOT) systems with Uplink Time Difference of Arrival (U-TDOA) systems to meet FCC requirements. With the new Assisted GPS chips and services, the location-based implementation problem will finally disappear.

>VOICE-RECOGNITION technologies will finally show progress. The continued R&D over the years is starting to pay off. Cell phones represent one of the key target areas that should help this technology realize its potential.

>SMART ANTENNAS should help solve some system problems. These intelligent antennas automatically divide a cell's service area into smaller and smaller sectors as needed to deal with traffic. Carriers can use them to boost capacity and make systems more reliable. The technology is young and the cost is high, but more will be deployed.

>CHINA WILL DOMINATE the cell-phone business within three years. In fact, it already does to some extent, and its influence is growing. With 180 million or so users, it's already the leader in subscribers—the U.S. has 135 million. While China is new to the arena, its growth rate is steeper than any other region. Its own initiatives in cell-phone technology may muddy the waters for 3G standards and strategies.

>THE WI-FI WIRELESS LOCAL-AREA NETWORK (LAN) access ports will grow, hampering 3G's progress. The Wi-Fi wireless LAN technology is successfully meeting the need for mobile e-mail and Internet access with laptops via the growing networks of wireless access points, called "hot spots." This is obviously killing most of the incentive, motivation, and potential for 3G. Some cell-phone carriers are already entering the wireless LAN access business as a hedge to the possible flop of 3G.

>CELL-PHONE CIRCUITS AND COMPONENTS will see more integration, as silicon vendors work toward the single-chip cell phone. More LNAs, synthesizers, and some discretes are now being integrated on one chip. As SDR develops, baseband chips will handle more operations. The goal is still smaller phones, more data capability, lower power consumption, and lower cost.

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