Broadcom Launches A New Smartwatch Platform For Android Wear Devices

-9.05%
Downside
54.67
Market
49.72
Trefis
BRCM: Broadcom logo
BRCM
Broadcom

Earlier this week, Broadcom (NASDAQ:BRCM) introduced a new smartwatch platform that reduces power consumption by up to 40% (over the previous generation) for Android Wear devices. The platform improves function and performance by offering a smaller form factor, enabling original equipment manufacturers (OEMs) to add more features or include a larger battery inside their wearable to allow for even longer time between charges. In addition to an advanced application processor (AP) and Broadcom’s leading Wi-Fi and Bluetooth combo chip in the new platform, OEMs can choose to integrate GPS with sensor hub processing, near field communication (NFC), wireless charging support and camera support based on their product needs.

Smartphones are expected to account for more than half of wearable shipments this year, and Broadcom’s new platform expands opportunities for Android Wear developers designing both high-end and affordable devices. Broadcom claims that it is in a majority of the top smartwatches for 2015. [1] Its new smartwatch platform is now sampling.

In addition to smartphones and tablets, Broadcom sees new growth potential in emerging markets, including the Internet-of-Things (IoT), automotive electronics, wearable devices and small cell technology. Currently, the rising mobile adoption worldwide is driving growth in the semiconductor market. IoT is still at a nascent stage, but is expanding fast and is considered to be the next big growth driver in the semiconductor industry.

Relevant Articles
  1. Fresh Highs On The Horizon For Broadcom Inc. Stock?
  2. Why Broadcom’s Rumored $15-Billion Acquisition Of Symantec Makes Sense
  3. Broadcom Limited Q1’16 Earnings Review: Wired & Wireless Business To See A Significant Jump After The Inclusion Of Broadcom Results
  4. What’s Broadcom’s Fundamental Value Based On Expected 2015 Results?
  5. By How Much Can Broadcom’s Revenue & EBITDA Grow In The Next 5 Years?
  6. Connectivity, Home Entertainment & Networking: What Is Broadcom’s Revenue & Gross Profit Breakdown?

IoT includes all other computing devices apart from PCs, tablets and smartphones. Gartner estimates the market to grow almost 30 times, from an installed base of 0.9 billion in 2009 to 26 billion by 2020. It will result in $1.9 trillion in global economic value-add through sales into diverse end markets. [2] Wearable devices, clothing and accessories incorporating computer and advanced electronic technologies, is a subset of the IoT market. Juniper Research estimates the wearable computing device shipments to increase from 15 million units in 2013 to 150 million units by 2018. ABI Research forecast the figure to cross 450 million units during the same period. [3]

Broadcom Continues To Expand Its Wearable Technology Portfolio To Tap Growth in The Market

Broadcom highlighted its intention to tap growth in the emerging wearable technology market in August 2013, when it expanded its Wireless Internet Connectivity for Embedded Devices (WICED) portfolio with the launch of a new wireless platform (WICED Direct) specifically targeting the smart wearable components. By allowing two devices to communicate with each other securely via Wi-Fi without an access point or computer, WICED Direct simplifies the implementation of Internet connectivity into an array of consumer devices. In August last year, the company introduced a new development kit into its WICED family to enable developers to rapidly prototype ideas and concepts for IoT devices and applications.

The wearable technology market is quite competitive with companies including Qualcomm, Intel (NASDAQ:INTC) and Texas Instruments (NASDAQ:TXN) increasing their focus on developing chips for the market. However, by entering the market at an early stage, Broadcom aims to gain a significant footprint in this fast growing segment. The smartwatch was one of the earliest wearables to hit the market, with companies such as Sony (SmartWatch), Samsung (Galaxy Gear), Pebble, and many others selling their variants in the market. Even Qualcomm (NASDAQ:QCOM) (Broadcom’s biggest rival in the mobile baseband market) released its own smart watch last year.

In the IoT market, Broadcom claims that the design activity remains high with its current products. It is in the process of refreshing its portfolio with purposeful products that are optimized specifically for different market segments. The registrations for Broadcom’s WICED IoT platform has grown significantly, from 2,000 at the beginning of 2014 to over 8,000 at present. The company has announced the expansion of its distribution channel with over 40 new partners to expand its sales reach to IoT customers.

Our price estimate of $44 for Broadcom is almost in line with the current market price. (Read: Key Factors That Will Drive Broadcom’s Future Growth)

See Our Complete Analysis for Broadcom Here

View Interactive Institutional Research (Powered by Trefis):

Global Large Cap | U.S. Mid & Small Cap | European Large & Mid Cap

More Trefis Research

Notes:
  1. Broadcom Smartwatch Platform Improves Battery Life for Android Wear Devices, Broadcom Press Release, February 25, 2015 []
  2. Gartner Says the Internet of Things Installed Base Will Grow to 26 Billion Units By 2020, Gartner Newsroom, December 12, 2013 []
  3. Broadcom Targets Wearable Tech Role, TechWeek Europe, August 30, 2013 []