Watch out, Qualcomm. An Israeli startup thinks it can make an end run around your core business of providing chipsets to smartphones. Altair Semiconductor, located in the Tel Aviv suburb of Hod HaSharon, aims to beat Qualcomm, as well as the other big semiconductor makers like Intel, Broadcom and Marvell, by eschewing the phone entirely and looking beyond to the “Internet of everything.”

That’s the Internet that very soon will be embedded in digital cameras, gaming devices, car entertainment systems, video surveillance, traffic control and all manner of sensors.

Spread the Word
• Email this article to friends or colleagues
• Share this article on Facebook or Twitter
• Write about and link to this article on your blog
• Local relevancy? Send this article to your local press

This “Internet of everything” stands to dwarf the smartphone market. After all, “people only have two hands and two ears,” explains Altair co-founder Eran Eshed, VP of marketing and business development. “How many cell phones can one person own?”

Altair’s play is to leapfrog over the understandable need to provide backwards compatibility in the cell phone space – where a device needs to operate on every network available, from the latest and greatest known as “LTE” (“long term evolution”) or 4G, as well as on previous, slower networks such as 3G and Edge when 4G isn’t available – and focus just on LTE.

That would initially seem problematic: In some locations, an LTE-only device simply won’t work. Israel, for example, currently has no LTE coverage at all.

Qualcomm, which provides 90 percent of the LTE chips used in phones today, therefore makes its chips “multimodal,” meaning they support the previous systems as well as LTE. By doing just LTE, Altair can make its chips smaller, cooler and, most important, cheaper. And that, Eshed says, will become increasingly important.

“Imagine you walk into a Best Buy and you see several versions of tablets. One is WiFi only and costs $199. Then there’s a multimodal one, that uses WiFi and 3G, which you can use everywhere, but it costs $329, a premium of $130 over the WiFi-only version.

“Now, what if there was a device that only offered LTE?” he poses. “You can’t use it everywhere, but it’s just $25-30 more than the WiFi-only version. Would that be an acceptable tradeoff?”

Eshed believes that for the typical “use case,” a price delta of $25 will make purchase of the LTE-only version a “no-brainer.” Altair hasn’t got its chip price down that low yet, but “we’re on the way.”

LTE in your camera and fridge

And it’s not just price. LTE is so far superior to 3G in terms of speed (as much as 10 times faster), that Eshed believes users of certain devices will wonder why they ever put up with 3G in the first place.

Take the Google Chromebook, where a user’s data is stored entirely on the cloud. The device doesn’t work at all without an Internet connection. Using a Chromebook or a similar “thin client” device is acceptable on WiFi, tortuous on 3G, but positively sings on LTE. Using one of Altair’s LTE-only chips can bring down the price of such a system dramatically.

The same logic will make LTE-connected digital cameras – which will, at least for the conceivable future, always be higher quality than the cameras included in even the best smartphones – a viable business.

In Altair’s vision, everything will be communicating via LTE – from your refrigerator to “machine to machine” devices, which don’t have a specific consumer interface (think smart traffic lights). Eshed estimates we’re talking about some 20 billion to 50 billion devices. That’s a lot of chips.

Eshed predicts that by the time we see LTE-only phones around 2015, Altair should have made decent inroads into the market.

Founded in 2005, the company is already shipping hundreds of thousands of chips. With 180 employees — 140 in R&D in Israel, the rest spread around the world in sales and service — Altair is no longer a small startup.

Placed his bets on LTE

The company has raised $100 million in venture capital investment and has 30 “Internet of everything” customers around the world. One is a Russian manufacturer that makes an inexpensive USB stick that plugs into your laptop and generates a portable LTE hotspot without needing an external power source. Such Altair-powered products are popular in price-sensitive markets like India and Latin America.

Eshed co-founded Altair with several other execs who had previously worked at a startup bought out by Texas Instruments in Israel. TI sent Eshed for a while to work at its facility in Texas, but he was eager to get home. TI later downsized its Israel operations.

Altair, Eshed says, is blessed with investors who are willing to see the big picture and weren’t constrained by a drive to see instant profits. That allowed the company to bet on LTE early, before it was even clear if the market would evolve. (In 2005, most techies thought a competing technology called Wimax, which Altair also developed for, would rule the day; it never took off big time.)

It’s just a matter of time until mobile broadband, which LTE represents, comes to Israel and everywhere else, Eshed says. “4G is not just an evolutional step. Getting rid of the legacy stuff streamlines the whole network architecture. It’s a fundamental paradigm shift.”