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Silicon Image – Convergence Spoiler

Attending CES is a great way to meet people willing to enlighten you with another side of an argument. The surprise topic that emerged was HDMI.

HDMI is everywhere. The A/V industry has a holy grail connector, and it is HDMI. It uses three copper diff-pairs to send data at an aggregate rate of 10Gb/S. It appears to me this would be a great candidate for serial optical technology as current HDMI cables are short, fat, and expensive. Regardless, all future video/audio transmission in the living room has converged on HDMI.

The only exception is computing, which according to many on the show floor is trending towards Displayport. HDMI requires royalties to Silicon Image (SIMG), and the razor-thin margins computing guys are forced to live with won’t tolerate that. Even though it would make perfect sense for computing and entertainment to converge on one connector, it appears the patent antics (….cough….RAMBUS (RMBS)) within a standards group have struck again.

Unclear what this all means today – either Silicon Image is the next Rambus v1.0 (i.e. license revenue from everyone) or they are the next Rambus v2.0 (i.e. drive computing industry away from your tech because you are too greedy). Displayport is worth watching as it appears to be the only potential spoiler.

Part of a CES 2007 Summary series. Click Here for a full archive.

Discussion

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  1. Not sure my first post made it. Silicon Image charges 4 cents per chip in licensing fees, thats it, 4 cents. You call that greedy? There is an annual $10K fee as well. So out of a $500 PC, 4-5 cents is the cost of HDMI royalties. Displayport will not be up and running for another year. This issue has nothing to do with royalties and everything to do with VESA standards body having power to enforce the display standard.

    Posted by Rick | January 14, 2007, 11:37 PM
  2. It is odd that three separate people independently mentioned, without my prompting, that the SIMG royalties would drive innovation outside HDMI. One of the three was a chip vendor, who certainly might have a bone to pick.

    Posted by Andrew Schmitt | January 14, 2007, 11:43 PM
  3. VESA is funded by someone? Only those who join VESA can make Displayport and there will be compliance certifications that will be the same as royalties. Development of the standard comes does not come from VESA, so all future developement will be Intellecutal Property of the developer. Without a revenue stream or royalty stream the standard will not develop further. An IP will be adopted and royalties will be charged. It is just a way to Dell, HP and others to try to develop a royalty stream of their own. HDMI will be fully integrated, simply due consumers not wanting a connector for the screen and another for their TV. There are several people who would not have to buy a seperate HD-DVD player and a HD-DVD laptop.

    Posted by Richard | January 19, 2007, 2:00 PM
  4. One of the fantastic things about this blog is the ability it gives me to dispose of incorrect or irrelevant information.

    Thanks to all.

    Posted by Andrew Schmitt | January 19, 2007, 5:12 PM
  5. Hey don’t quit now, keep letting us know what you hear from your contacts. Appreciate your time in putting this together.

    Posted by Rick | January 19, 2007, 5:26 PM
  6. This is exactly why I do this. You think I do this for fun?

    Posted by Andrew Schmitt | January 19, 2007, 5:52 PM
  7. Is anybody ever happy when they have to pay royalties to a competitor? Or are they pissed becaused SIMG keeps revising/upgrading the HDMI stnadard, which enables them to have a six month plus head start on the competition just as they catch up to the old standard.

    Did these unhappy vendors acknowledge that the annual licensing fee was cut 33% in November?

    Currently, I do not see any competition in the Consumer Electronics market for HDMI. While some people see Displayport as being competition in the business PC market to HDMI, it is at least 12 months out, mainly because version 1.0 was uncompatible with HDMI-HDCP. I mean GNSS is betting their survival on Displayport and I have a hard time believing that Displayport will not have any type of royalty structure once it finally comes to market. And what is to keep SIMG for coming in and buying GNSS to then have control of Displayport also?

    I will say that innovation and competition are a good thing for the consumer.

    Posted by Mike | January 20, 2007, 12:37 PM
  8. Beware of what vendors say, when you are only getting $4 for a chip, $0.04 is 1% of your margins. 1% of your margins is a big nut. I am still a believer in SIMG, but their is a tide of negativity forming. Just be careful… I know 4 cents doesn’t seem like a bunch of money, but on a net margin basis it is significant in the industry. HDMI as a driver for SIMG is losing steam, Steelvine are bust! IMHO

    Posted by Troy McClure | January 20, 2007, 11:58 PM
  9. There is a $7,000 annual fee to join VESA. So the difference is only $3,000 annual fee and 4 cents a connector. The problem is Dell, HP and Lenovo are left out of the revenue stream. Displayport might require royalties on certain products. So not the only difference is a $3,000 annual fee. With HDMI there is testing assurances with Diaplayport it is every company for themselves. The adopters are Sony, Toshiba, Samsung, ASUS, ACER, Gateway, Viewsonic, ViZIO, Panasonic are putting HDMI in there units. Dell and HP are bleeding with sales of the displays because they are refusing to use HDMI in there screens. Micheal Dell just took back the reigns due to losses and ACER just surpassed Lenovo as Number #3 in the PC Market. It will be a matter of time, till the consumer says that convergence is worth the 4 cents.

    Posted by Richard | February 1, 2007, 10:06 AM
  10. DisplayPort makes total sense for the computer industry as well as the CE industry. Current HDMI standards are really rectified by a single company – Silicon Image. The HDMI ATC tests are also updated on a more than too frequent schedule. The release of new standards and testing was announced without any pre-anouncement, no roadmaps… all this makes it hard for manufacturers to keep up with Silicon Image. Any sane company cannot leave their product roadmap up to Silicon Image. You might want to consider that Silicom Image also controls & pushes SimplayHD compatibility testing.

    The release of HDMI 1.3 was totally driven by the release of DisplayPort – claiming to be able to transfer close to 10Gb/s. This will be problematic as with the release of the new 1.3 spec, there will be two speed grades for a HDMI cable – and no mention of how to differentiate the cables on a hardware level. One cable will be supporting up to 1080i, the other cable will be supporting at least 1080p.

    Posted by peter | June 26, 2007, 12:26 AM
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