[opendtv] Re: Mobile DTV test

Oops. Sent the last one without typing my reply.
 
Yes, IP licensing costs are becoming an increasing percentage of chip costs 
with each new level of integration. One solution is to make the license a 
percentage of the ASP (average selling price), rather than a fixed dollar 
amount -- if the IP owners can agree to that. I forget the exact figure, but at 
one time the MPEG2 royalty for DVD chips was a fixed dollar amount which would 
be ludicrous today, considering you can buy an DVD-player-on-a-chip -- 
everything but the drive mechanism itself, for something in the neighborhood of 
$10-$15 -- probably less, depending on who you are and what your volumes are. 
Suppse the IP royalty was $3/unit. 25-30% of the ASP to the IP owners of "the 
standard," while the chipmaker who invests millions to produce and support the 
chip (and adds value with his own IP) gets margins in the single digit 
percentages? That business model doesn't fly. That lead to things like we see 
in China, where they are developing thier own standards and their own I!
 P, for the simple reason that the cost of licensing the "standard" IP is too 
prohibitive.
 
Now fast forward a few years into the future, when virtually every TV set sold 
in the U.S. contains an ATSC receiver/decoder, MPEG2 video decoder, Dolby audio 
decoder, NTSC decoder, graphics engine, microprocessor, video scaling engine, 
etc. Now imagine that today's $200 TV sets will sell for $250 at retail (in 
equivalent 2004 dollars). The WILL sell for that small a premium, or they won't 
sell at all. Now back out the retail markup, the TV mfr markup and the 
chipmaker's markup. What do you think those chips will be selling for in 2007? 
My guess is around $10. How much of that $10 can possibly (without incurring a 
loss) be given to the large pool of IP owners? A few pennies to each of them?
 
I remember reading once that Zenith/LGE was hoping to get $5/unit for the 8-VSB 
patents. How much will that royalty really turn out to be when 8-VSB is a small 
fraction of the chip area on a $10 chip?
 
Tom brings up a valid point -- if the licensing cost of a particular IP block 
is too prohibitive, it will not be integrated. I would add the following 
corollary: whatever is not integrated will not be included in the product, 
except for those things that cannot be integrated for technical reasons (like 
maybe RF tuners). Regardless of mandates, etc., the end product will be made 
affordable. If there are one or two IP blocks that drive the cost through the 
roof, they will either find a niche market or they will disappear entirely.
 
-- Frank 
-----Original Message----- 
From: Eory Frank-p22212 
Sent: Saturday, April 10, 2004 1:34 PM
To: 'opendtv@xxxxxxxxxxxxx'
Subject: RE: [opendtv] Re: Mobile DTV test


 

[opendtv] Re: Mobile DTV test

*       From: Tom Barry <trbarry@xxxxxxxxxxx> 

*       To: opendtv@xxxxxxxxxxxxx 

*       Date: Sat, 10 Apr 2004 07:24:43 -0400 

Eory Frank-p22212 wrote:

 > I wonder if there will be a market for standalone demod/FEC chips 

in 2005? There are guys out there who already have DTV-on-a-chip today 

-- demod/FEC, MPEG2 video, NTSC video & audio, Dolby audio, graphics, 

microprocessor, etc. I don't know what they cost, but clearly the 

value of each IP block is dropping fast as the integration level 

increases.



Interesting point.  But the incremental cost to add something to a 

chip is also determined by the IP licensing cost.  If that is 

significant then it is less likely a function will be integrated along 

with big collections of possibly useful stuff.  I'm not sure how that 

stacks up here.



- Tom

  



 
 
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