I talked today to a company called Telegent Systems who make chips for adding TV to cell-phones. The bulk of their business is adding ordinary over-the-air analog TV to cell-phones. You’ve probably never seen this since the US is not the primary market for this, not least because we finally just turned off analog TV. But it is a potentially huge market. It is unusual to find an American company completely focused on the non-US market since there really isn’t a domestic market. The US is such a big market and is a leader in many segments so it is natural to think of the rest of the world as where you go to once you’ve nailed the US. Sometimes it’s even more parochial. Nail Silicon Valley, then the rest of the US, then maybe Japan and Western Europe. But some markets are completely backwards from this.
It is always easy here to miss what is happening in wireless because the US is its own market, and a laggard rather than a leader. It has some standards not really used anywhere else. It is dominated by walled-garden operators like Verizon and AT&T who have their own stores, who have 2 year contracts and so on. The rest of the world isn’t like that. The average Chinese cell-phone owner changes their phone every 6 months. Stores in much of the world sell phones to work on all operators, perhaps because I don’t think there is any other country where the radio-interface isn’t standard for the whole country, usually the near ubiquitous GSM. Even someone as smart as Andy Kessler calls for all phones to work on all networks without realizing that this is a technical issue not just a business one. The phone and the network service are really two separate purchases: you can buy a phone and then buy a SIM-card which controls the network service, and just put the SIM-card in the phone. So the US is very non-innovative since it is all controlled by what the network operators like or don’t like, compared to some of the freer markets overseas which are driven by what the consumer likes or doesn’t like. It’s still like the internet was in the dark days when most consumers connected to AOL.
Apple gave Verizon (apparently) and AT&T a take-it-or-leave-it deal with the iPhone which served to break up the walled-garden somewhat. Until then, for instance, if you wanted to watch a video on your AT&T phone you couldn’t to go YouTube or anywhere else, you had to go to AT&T’s video site. Verizon are probably regretting saying “no” to the deal as they hemorrhage high-end customers to AT&T to get iPhones despite their better network quality.
There will be over 54 million phones shipped this year receiving analog TV and all of them are powered by Telegent. But that’s a tiny bit of their potential market since there are something like 5B people in the world who have a cell phone but no access to mobile TV. In fact, in many cases, no access to TV at all. Buying a phone with TV capability may be their only way to get a television. So despite the world going digital, both Instat and Forward Concepts are forecasting that analog TV will dominate the market for the time being.
Telegent are a fabless semi company based partially here in Silicon Valley and partially in Shanghai. Their end customer are the cell-phone manufacturers who see this as the first new feature that they can add to phones, especially low-end phones, since mp3 players many years ago. It gives them differentiation and, since it is picking up the standard terrestrial analog broadcast signal, it doesn’t depend on the wireless network operators’ support or the need to negotiate any special broadcast rights (good luck on doing that in less than a year or two). It is driven by consumer demand, since TV is free over the air. The only cost is the incremental cost of the chip in the phone and it’s an under-$10 part. Telegent solved the old problem of how do you build an analog TV receiver in a new way, namely putting everything into a single cheap chip, making do with a small cell-phone screen, and making do with a tiny antenna nothing like the one you used to see on every house’s roof, which would rather spoil the show. Some interesting technical challenges.
They started 5 years ago with the Chinese market as their first target. They always knew that their customers would primarily be overseas, at least for these initial products. Since then they have expanded into Latin America, South East Asia, Middle East, Russia. In China, since, as I said above, the average cell-phone customer changes their phone every 6 months, this has meant that adoption has been driven very fast without needing to wait years for the installed base of handsets to turn over.
It has also turned out to be a big asset in emergencies. In the recent earthquake in Sichuan the only way people were getting information at all was on their mobile phone TV since so many cell-phone towers had been destroyed, but over-the-air TV could be picked up from as far away as Taiwan. The Telegent mobile TV chip has better sensitivity than most normal TVs plus, for several hours of watching, didn’t require the power grid to be working.
They are moving into digital TV and, as they do, the US market will start to become more important. Telegent want to get TV into every laptop too, since with a bigger battery and a bigger screen it will be a better experience. Their goal in life is to make every LCD flatpanel into a TV: cellphones, laptops, displays, photo-frames, DVD players.
Meanwhile, in Africa next year there is a big event that will potentially drive a lot of interest in watch-anywhere mobile TV, namely the World Cup, which is hosted by South Africa this time. Something else where the US is not the primary market and where you won’t realize its importance without leaving the country.