ATI Broadens Its Graphics World

Graphics chipmaker ATI expanded its reach into

new markets this week with the help of a product launch and an

acquisition.

The Markham, Ontario-based firm said it has finalized its purchase of

CuTe Solutions out of Hyderabad, India. CuTe makes audio and digital

media products that will help broaden ATI’s offerings for consumer

electronics devices and PCs, ATI executives said.

“By acquiring CuTe Technologies and establishing an ATI office in

India, ATI has expanded its multimedia expertise to audio processing

thereby strengthening its presence in the mobile phone market,” the

company said in a statement.

CuTe’s audio products support more than thirteen codecs

, all optimized for ATI’s IMAGEON low-power-consumption

and low-memory processor.

CuTe’s offices in Hyderabad will also form the basis of ATI’s new

research and development center in India. The company said ATI Technologies India Private Limited will retain CuTe’s staff and plans to hire additional engineers.

In a separate but related announcement, ATI

introduced two new media processors with improved multimedia capabilities, the IMAGEON 2282 and IMAGEON 2182.

They feature CD-quality audio with

high-quality stereo recording and playback in industry standard formats,

including AMR , AAC , MP3, Real Audio, WMA

and MIDI . The video engine enables a mobile

digital video recorder/player and a 3 mega-pixel digital still camera.

In addition, the IMAGEON 2282 provides video streaming and video

conferencing functionality with picture-in-picture support.

The higher performance IMAGEON 2282 is targeted at the high mid-tier

mobile phone segment while the IMAGEON 2182 targets the mainstream, low

mid-tier segment. Phones powered by the new IMAGEON processors are expected to ship

later this year from handset manufacturers, ATI said.

ATI’s market moves may be coming at the right time. JupiterResearch’s

annual wireless forecast, published this week, found that 2003 ringtone revenues

of $91 million more than doubled to $217 million in 2004. They’re predicted to reach $724 million in 2009.

Likewise, mobile games revenues, which are graphics- and video-
intensive, were $24 million in 2003, tripled to $72 million in 2004 and

should reach $430 million in 2009.

Despite this rapid growth, JupiterResearch’s report found ringtones

and games accounted for just 10 percent of U.S. carriers’ non-access

data revenue in 2004, partly because ring one and game-capable handsets

have not yet achieved very high market penetration. Overall, mobile data

services revenue, including ringtones, games and messaging services,

still represents only single-digit percentages of carriers’ consumer

revenue. But given the recent and projected growth, U.S. carriers

have reason to be optimistic.

“During the next five years, the mix of data services will evolve,

but messaging will still account for 65 percent of non-voice, non-data

access revenues,” Julie Ask, research director at JupiterResearch, said

in a statement. “Carriers’ premium content revenue mix will continue to

diversify with the growing popularity of games, wallpaper, content and

productivity applications. Ringtones will remain the largest revenue

stream for carriers in the premium content category but will not

dominate as they have in previous years.”

ATI is obviously counting on its IMAGEON processors and its

acquisition of CuTe’s research and development centre in India to help

capture that growing market.

“Just imagine the freedom of taking the functionality of your

camcorder, MP3 player and digital still camera with you in a package

that only weighs a few ounces,” Ravi Gananathan, a senior product

marketing manager at ATI, said in the company press release. “The new IMAGEON processors combine advanced audio and video processing capabilities to turn mobile phones into

mobile entertainment centers.”

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