Pen Phone rewrites the rules

[Dave Farber <dave () farber net>]

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From: Truchaos () aol com
Date: Wed, 09 Jul 2003 12:46:11 -0400
To: dave () farber net
Subject: Pen Phone rewrites the rules

Sticklike Pen Phone rewrites the rules

By David Carey
 
June 16, 2003 (12:04 p.m. ET)

The P5 Pen Phone is a novel GSM handset introduced in China by Haier Group.
The product highlights the increasing threat that Chinese companies like
Haier pose to incumbent handset brands on a local-and potentially a
global-basis. Rapidly declining component complexity and the swiftly rising
sophistication of Chinese manufacturers give them the opportunity to upend
the pecking order in the handset universe. The P5, whose 66-gram, 18-mm-wide
(0.72-inch), sticklike construction breaks new ground, supports the notion
that component commoditization in the hands of eager producers drives rapid
product experimentation and novel designs.

Bells and whistles are surprisingly plentiful in the Pen Phone. Polyphonic
ring tones, storage for 300 names and numbers, and a 15-minute
voice-recording capability add up to an impressive feature set in the
diminutive package. Respectable talk/standby specs of about two hours and
three days, respectively, are claimed for the 420-mA-hr internal lithium-ion
battery. As an intriguing twist, Haier even added a laser pointer to the
P5-likely with noticeable drag on battery life if heavily used.

Noteworthy for both form factor and general fit-and-finish, the Haier phone
employs highly integrated core devices from merchant IC suppliers-in this
case a Texas two-step. Texas Instruments Inc. (Dallas) supplies analog and
digital baseband ICs while the Aero transceiver chip set from Silicon Labs
(Austin) provides the direct-conversion radio.

Four megabytes of Intel Corp. flash memory is paired with the internal SRAM
of the TI baseband chip for system memory. The widely used RF3110 power
amplifier module from RF Micro Devices (Greensboro, N.C.) drives a patch
antenna that's appliqued to the interior casing. Component count and
semiconductor die area are both remarkably low in the P5, paralleling the
falling barriers to entry for handset manufacturers worldwide as reference
designs, component integration and simplification all continue.

Cost of goods sold for the P5 handset is driving toward the $40 mark, with
good margins implied despite a recent inventory build of handsets in China.
While non-Chinese suppliers capture the lion's share of the bill of
materials, it seems likely that the Chinese government's efforts to promote
higher domestic content will make inroads into the share of offshore IC
makers in the component space. As evidence of government initiatives taking
hold, consider that at the end-product level, Chinese handset producers
supply about 30 percent of domestic demand today, up from 3 percent just
four years ago.

Haier Group, the largest electrical appliance manufacturer in China with
more than $8 billion in revenue, is one of the 20-plus domestic cell phone
manufacturers vying for the perceived bonanza that is China's wireless
market. While a shakeout is likely, the impact of the surviving Chinese
handset makers-whether Haier or its competitors-will be felt worldwide.


http://www.eet.com/story/OEG20030616S0074


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