Broadcom Corp. is out to complement its position as the leading supplier of connectivity chips to the world’s largest consumer electronics brands with a customer base made up of hot startups and emerging companies in the Internet of Things market.
The strategic shift has helped the Irvine-based company amass a mix of smaller customers that range from makers of portable breathalyzers and wireless grilling thermometers to manufacturers of mini drones and smart guitars.
“We’re going to enable more and more of that,” Broadcom Chief Executive Scott McGregor told the Business Journal. “We’re really just helping to create an overall innovation wave that I don’t think we’ve seen” in awhile.
The new lot is a far cry from the roster of big-name companies—Samsung, Apple and Sony, among others—that helped Broadcom grow steadily for years on communication chips. That segment of the market played a key role in its record sales of $8.42 billion last year.
The roster of smaller customers represents an opportunity to gain a firm foothold as a supplier for a wide range of products in hopes that some of them hit it big.
“Broadcom is great at elephant hunting,” said business development director Jeff Baer, who’s responsible for driving the company’s push into the Internet of Things market. “As we move into these new and nontraditional Broadcom market segments, such as IoT and wearables, there are only mice.”
Rounding them up hasn’t been a problem for Broadcom—which ranks No. 2 on the public companies list (see page 10)—in the early going.
The company has provided chips that power roughly 1,500 products since the 2011 launch of its WICED Smart and Wi-Fi communication chipsets, which allow devices to talk to each other.
iDevices
Connecticut-based iDevices LLC has been using Broadcom chips the last few years in meat thermometers that allow customers to remotely customize and monitor grill temperatures and cooking times to suit their tastes.
The company, which has grown sales to more than $20 million since its 2010 launch, was introduced to Broadcom through Apple, which carried its debut product online and in its retail stores.
“When Apple introduced us a few years back, they saw an opportunity,” said iDevices Chief Executive Chris Allen, a former stockbroker who drummed up the idea after growing tired of glitches in his old battery thermometer.
The thermometer has led to more than 500,000 downloads of its app, which is included in the anticipated Apple HomeKit platform for connecting household devices.
Electric Imp Inc., which makes developer kits, relies on Broadcom’s combo Wi-Fi and controller chip to connect its operating system to its cloud service.
The link allows businesses to build a line of connected products more easily and affordable in-house, according to cofounder and Chief Executive Hugo Fiennes.
“Product companies are not that equipped to enter that area,” said Fiennes, a former Apple engineer who worked on the iPhone. “No matter what product you’re making, you can just use this platform and have this head start on making connected products.”
The Los Altos-based company, which launched its hardware and software offering about three years ago, has helped several companies bring products to market, including makers of smart power outlets and smart irrigation controllers carried in Home Depot. It’s also had a hand in fostering a new cricket scoreboard in Australia, and a Budweiser promotional goal light distributed in Canada during the Winter Olympics that lights up and buzzes automatically when your favorite team shoots a puck in the net.
“They thought they would sell a couple of thousand,” Fiennes said. “They sold out in 40 minutes. The fans absolutely loved it.”
Zivix
Minneapolis-based Zivix LLC, the maker of the $300 Jamstik smart guitar, is using Broadcom chips and changing the way hobbyists and students are learning to play and read music.
Zivix, which has raised $5 million since its 2011 launch and has its products distributed in 50 Apple stores, signed a deal late last year with Broadcom to use its Bluetooth chips in its 16-inch device that enables users to enhance their strumming skills through sensors on a metal fret board. The data from strumming is transported to a PC or Mac, which essentially act as sound processors and speakers.
“This is a whole different territory,” founder Chad Koehler said of the Broadcom deal. “It makes the user experience better.”
The company, which won a CES 2015 Innovation Award, has raised more than $235,000 from nearly 1,000 Kickstarter backers in a current crowdfunding campaign to bring its second-generation product to market.
Zivix and other relatively small customers represent an opportunity for Broadcom to leverage its strong standing in connectivity.
It’s long-established position stems from powering Wi-Fi, Bluetooth, GPS and radio-frequency applications in iPhones and Samsung’s top-selling smartphones with low-power-consuming, enhanced security chips.
Industry Boom
Steady advances in connectivity chips—coupled with the growth of crowdfunding sites and the increasing power of smartphones—has helped foster an industry boom, eliminating long-standing barriers to entry for newcomers.
“We’re cultivating this new garden of opportunity,” said Brian Bedrosian, who runs Broadcom’s emerging embedded Wi-Fi and Bluetooth Smart business in the audio, healthcare, home, consumer appliances and industrial segments. “That’s the way we’ve been trying to approach it.”
Global sales of components and equipment that power the Internet of Things market will explode to $7.1 trillion by 2020, up 273% from 2013, according to Massachusetts-based market researcher International Data Corp.
Morgan Stanley estimates that some 75 billion products, such as washing machines, lighting systems and body health sensors, will be connected to the Internet by then.
