By Scott Denne
Altair makes chips to transmit and receive data on LTE, a growing standard used by many of the world’s mobile carriers. Its chips are only used for data on devices such as laptops and tablets, and don’t have the capability to tap into 3G, a slower, ubiquitous mobile standard. That means its chips can’t be used in smartphones today, which make up about 90% of the LTE market, estimates Eran Eshed , Altair’s vice president of marketing and one of its founders.
For now that’s working to its advantage as the market is too small to attract much attention from Qualcomm , especially when that company has incentives to limit the size of the market for LTE-only chips.
Altair’s chips, which are referred to in the industry as “single-mode LTE” because they can’t operate on any other standards, are priced significantly lower than multi-mode LTE chips, in part because of the cost of licensing essential patents for 3G from Qualcomm , Altair’s main competitor.
While Qualcomm dominates the market for LTE chips, it doesn’t offer a single-mode LTE chip today and Mr. Eshed said that it could build one and eventually will. For now, it generates too much revenue from licensing essential patents for building components for 3G networking.
A representative from Qualcomm didn’t respond to questions about when the company might enter the market. The company made more than a third of its $19.12 billion in revenue in its most recent fiscal year from licensing its patents and acknowledged that royalty rates on single-mode LTE and single-mode WiMax chips are lower and its licensing revenue could be harmed if those products proliferate, according to its most recent annual report.
“Right now there’s a window of opportunity open and if we don’t invest in sales and marketing and supporting our latest product line, not only will we not grow, we’ll decline,” Mr. Eshed said.
Altair, which has sold more than one million units so far, is focused on getting its devices into mobile computing products, such as laptops and tablets; connected consumer devices, including digital cameras and gaming devices; and machine-to-machine communications products, such as smart-grid devices, connected cars and sensor networks.
Today the volume of these chips is relatively low and the price of adding LTE-connectivity to a device is still high. Once volume picks up and the price of adding LTE-connectivity to a device drops to about $20 or $30 the market will really expand, Mr. Eshed said.
To help this along Altair is moving from a single, general-purpose chip to making different ones that are optimized for different parts of the market, he said.
Founded in 2005, Altair has now raised $96 million in funding.