Bluetooth’s Rise Linked With Mobile Growth

Research firm IDC sees double digit growth in the future of worldwide Bluetooth semiconductor revenue. The firm is predicting an annual compound rate of 14.5 percent between now and 2012, with revenue going from $1.7 billion in 2007 to $3.3 billion by 2012.

It won’t happen immediately. Due to the economic slowdown, IDC expects 2009 to be flat with 2008 to down by two percent before recovering with alacrity in 2010. The vast majority of that revenue comes from mobile phones and headsets. Mobile phones are 58 percent of the overall Bluetooth market and the headsets, almost a fashion accessory in places like the Silicon Valley, are another 12 percent of the market.

The remaining 30 percent of the Bluetooth semiconductor business is scattered among peripherals like keyboards, mice and controllers. For example, the wireless controllers in Nintendo’s Wii console use Bluetooth, since the controllers are designed with motion detection as gamers swing the controller around to mimic on-screen action.

Unlike a traditional wireless device, which uses a radio frequency, Bluetooth does not need a clear line of sight to transmit its signal. It can also transmit up to 30 feet, much further than the signal used in a wireless keyboard or mouse.

Ajit Deosthali, research manager for Short Range Wireless Semiconductors at IDC, said Bluetooth in 2002 was found in just four percent of handsets sold worldwide. Today, it’s in 57 percent of cell phones. By 2012, IDC expects 72 percent of phones shipping will have Bluetooth embedded.

“That is the biggest area of growth [for Bluetooth] right now,” he told “Every technology needs a technology or application to carry it. Bluetooth was identified as a wireless audio connectivity protocol, though it’s not limited to audio.”

That 58 percent market share for Bluetooth may seem low, since it’s a standard feature on almost every phone sold in the U.S., but Deosthali said on a global basis, many phones are sold without the chip, particularly in emerging markets like China and India.

“There are cost-sensitive markets in the third world, where you can save $1.50 and $2 in your bill of materials by eliminating Bluetooth,” he explained.

Bluetooth headsets have not kept up with the rise in availability because early Bluetooth headsets were poor quality and suffered from outside noise. Over time, better Bluetooth headsets, such as the Jawbone noise canceling headset from Aliph, have come onto the market.

Deosthali thinks the improvements in sound quality along with growing legislative efforts in certain states, including California, requiring hands-free devices for drivers will help spur sales. In the peripheral space, Bluetooth faces competition from other technology such as Wireless USB but with the drop in prices for the chips, it could make headway with keyboards, mice and controllers.

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