Mindspeed’s $76.8m acquisition ofbaseband chipset maker picoChip is significant and marks the true transition from what could be called as the ‘femtocell-era’ into what is being referred to as the small cell revolution. 2011 was the year when the term ‘small cells’ emerged, mostly seen as an umbrella term under which femtocells, picocells, microcells and even Wi-Fi could be categorized. Small cells were the flavor of Mobile World Congress 2011, and are expected to gain further prominence in 2012. ‘Het Nets’ or heterogeneous networks have become commonplace terms referring to the use of disparate technologies including small cells, compact base stations and traditional macro cells to solve the growing imbalance of network capacity and smartphone/tablet driven data demand.
picoChip has been a pioneer in the femtocell space with close to 70% market share (ABI Research estimates) for HSPA/WCDMA femtocells in 2011. picoChip’s closest rival Percello was bought out by Broadcom in 2010, leaving picoChip as a suitable acquisition target. While the femtocell market (indoor residential and enterprise) continues to grow, albeit at a smaller pace than expected, picoChip has been looking beyond indoor femtocells launching solutions catering towards the metro/rural outdoor small cell space. Mindspeed has largely been focused on LTE outdoor small cells. In our latest report card for the 2011 femtocell market, we did point towards the growing segregation of the femtocell and small cell chipset markets, and the market being ripe for consolidation.
The coming together of Mindspeed and picoChip does re-emphasize the importance of small cells as a technology enabler in future networks, also points to the fact that companies like picoChip have grown beyond the femtocell sphere and are moving to the next level, which is the looking at the larger small cell opportunity. They now will be able to truly compete in size and scale with the likes of Texas Instruments and Freescale who are forging ahead in that space. Broadcom and Qualcomm, two of the other baseband chipset providers who are still seen as largely indoor femtocell focused need to pull their socks up if they are to successfully compete, especially around LTE outdoor small cells where majority of market activity is currently focused.