George West said:
We forecast both units and revenues. In this case the chip ASPs are close enough that it doesn't make much of a difference.
Does ASP = 'Average Selling Price'? From your comment, is it safe to extrapolate this statement: "The required proprietary hardware chip and licensing cost for Insteon, Z-wave and UPB are close enough that it doesn't make a difference in their retail pricing"? I am jsut taking a guess and I know you didn't mention licensing.
George West said:
For the entire market of technologies that are used to provide control functions in the home the ranking goes roughly
proprietary 400MHz, UPB, X10 - 100%
INSTEON, ZigBee, Z-Wave - Everything else.
If you turn it around and look at technologies where there are new design wins it is primarily 400MHz (Point to Point), + the I - Z gang.
Can you please rephrase or explain that? I don't understand. Is that a ranking? How does 100% get in the middle?
Well I was in a hurry with my post...
We forecast two things, shipment volumes and average selling price. In this case the 40% number refers to the number of (INSTEON, ZigBee, Z-Wave) chips shipped. This represents a rough proxy for the number of products that actually made it out to the market and were purchased by someone. It is not a perfect measure although it turns out to be pretty good. Since the average prices for chips using the different technologies is roughly equivalent we use number of units instead of dollars. The way you phrase it is about right. The only thing is that we looked at ZigBee instead of UPB.
You bring up a good point. Right now the prices of the underlying technologies are close enough that there shouldn't be the large discrepancy in retail prices that we see for the different switches and such.
About the 100% in the middle.
I expect that all of us reading this are pretty comfortable with the idea that X10, UPB, IR and different proprietary RF solutions have been around for long enough that the number of products in the market using these technologies totally swamps any of the newer technologies. We have pretty big sales forecasts moving forward for all of the above mainly as replacement or enhancement to existing products or deployments. We just don't see a lot of new design wins happening using those technologies.
It's sort of like BlueRay/HD-DVD. Compared to sales of regular DVD players the shipments numbers are about 0% of the total. It is only BR/HD-DVD that anyone in the press cares about. Trying to explain the comparison is tough when you are told to do it in one or two sentences.
Why don't we look at UPB?
The short answer is that nobody asks us about UPB.
A longer answer is that we don't see any companies that want to take UPB into the mass market. We are long time admirers of the underlying technology used in UPB. I can't remember when I read the first article about the UPB protocol, although I think it was over five years ago. We definitely looked at it as a competitor to ZigBee when we published our first ZigBee report in 2003.
The issue that we see is that the folks selling UPB products seem to have a good market selling into the pro installer market and don't want to upset that revenue stream. For those familiar with LonWorks it is a similar story to Echelon and its refusal to drop its prices even in the face of competition with similar functionality at dramatically lower price points entering the market.
Hope this clarifies things.