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In
stark contrast to other hardware players, Texas Instruments
has established the Third Party Program, whereby it allows
third parties to develop certain applications based on its
hardware. The move is aimed at helping the chip major establish
itself as the leader in the DSP industry. But will it work
out? Prashant L Rao finds out
TI’s
Third Party program has netted over 500 partners worldwide
who are generating business in the range of $3 billion. However,
the chip giant is not content with this and has set its sights
on increasing the presence of Indian firms in this program
by doubling the number of such partners in the country in
2002. With these moves, TI is perhaps the first hardware major
to adopt techniques that are a way of life at software companies
which rely on partners to win the war in stark contrast with
hardware vendors who would rather sue, than partner with others.
Global strategy
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Wagstaffe
says the company will now focus on roping in Indian companies
for its third party program |
Globally,
TI’s game plan has worked like a charm. TI’s partners,
even excluding the biggies, generate $3 billion in sales a
sizeable addition to the company’s own $10 billion in
revenues. Better still, these partners work on areas where
TI is weak and can’t afford to throw its resources which
are better focused on its core strength areas such as telephony.
2001 was a terrible year for the semiconductor industry with
a precipitous 33 percent drop in sales. This does not augur
well for Intel, which leads the pack with $23.5 billion in
sales; but it’s worse for TI which is number five with
$6 billion in sales. That’s yet another reason to rope
in hundreds of partners who can react faster to the twists
and turns of the economic landscape and give TI a safety net
when the bottom is falling out of the market.
Also, with the latest forecasts predicting a six percent rise
in global semiconductor sales this year with the market shifting
gears to grow by 21 percent in 2003 and 2004, TI will be well-placed
on the rebound if its strategy comes good with loads of new
IP to sell to makers of consumer electronics and communications
devices to just name two prominent examples. Handhelds, MP3
players and cellphones will all need algorithms and IP to
help manufacturers put more and more features into shrinking
devices and TI with its growing based of third-partner and
own IP will be well poised to tap into this phenomenon.
The Indian angle
Already 5 percent of TI’s third-party algorithm development
takes place in India. This is especially significant since
TI’s third party partners will be doing high-level work
creating IP for the global market. 500 algorithms have been
certified to date of which 75 are from third parties. Two
percent of TI’s third party partners are in India, ten
percent are in Asia and an overwhelming 51 percent are located
in the US. “There hasn’t been
sufficient focus on India so far,” says Raymond J Wagstaffe,
Worldwide Third Party Partner manager, Texas Instruments.
“We intend to change that and provide guidance to start-ups
who want to be part of our Third Party Program. We are looking
at companies with a maniacal focus on our platform.”
The list of Indian partners includes start-ups such as Ittiam
as well as established companies such as Tata Infotech. Some
others are Encore software and Adamya. TI has close to a dozen
partners in India.
The Intel of DSP?
TI’s strategy is to become the Wintel of DSPs. It’s
ExpressDSPplatform and framework is the basis for the Third
Party program. While TI provides the framework, partners create
solutions using it. “Professionals use ExpressDSP as
a guideline for writing DSP code,” says Sham Banerji,
director,
DSP & broadband products (India), Texas Instruments (India).
Another way to put it is that TI provides the silicon and
third parties write the software to make that silicon usable.
Sounds familiar?
Using software tricks in a hardware world
Traditionally hardware companies have tended to be highly
suspicious of third-party partners with court cases being
common for IP infringement. TI’s program has however,
a parallel in the world of software where companies actively
encourage other companies to develop software on their platform.
This has largely been the case with OS vendors, Sun in the
case of Java and, back in the early days of the Web, Netscape.
Software vendors routinely publish APIs and encourage smaller
companies to use them to create innovative apps that boost
sales of their platform. Hardware vendors don’t normally
co-operate with others and go out of their way to stop people
from figuring out how to hook new designs onto their platform,
a task usually done by reverse engineering.
The program
To avoid conflict of interest, TI suggests areas where it
has low coverage, such as broadband, to third parties. It
discourages work in areas where it is already very strong,
for instance, telephony where two out of three cellphones
ship with a TI chipset inside.
What’s in it for partners? TI execs make joint calls
with third party execs. Third party solutions are featured
as part of TI’s catalogue and on the TI website which
is tremendous exposure for a start-up.
TI’s aim is to bring universities and third party program
partners together. At the end of the day, the aim is to forge
an alliance with lots of companies and let the market pick
the winners. TI has no illusions on that score.
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