Credit Suisse discusses Portalplayer (PLAY) today in their morning note.
Michael Masdea now sees Portalplayer as a potential supplier for the Microsoft Zune player, and specifically highlights the existing relationship Portalplayer has with Microsoft.
Current MSFT relationship is key. For many months now, PLAY has been working with Microsoft to develop the Preface technology for laptops. Microsoft is putting significant marketing dollars behind Preface through the “Windows SideShow” name and the Vista launch. As the hardware PLAY ships for the Preface platform is very similar to what PLAY ships into MP3 players, we believe Microsoft will be more inclined to use PLAY chips for its own MP3 player.
This is a concept that we have seen, followed, and talked about for the last six months. It is refreshing to see that this concept is finally more broadly recognized.
Rumors have been coming fast and furious over the last month about Microsoft’s (MSFT) entry into the digital music player business. The NY Times broke the story today with multiple confirmed sources, turning rumors into fact.
PortalPlayer (PLAY) continues to follow a trajectory of diversification from it’s core Apple (AAPL) iPod business. Portalplayer currently derives 90% of it’s revenue from Apple iPod and Nano hardware sales and is working on a new chip in partnership with Microsoft (MSFT) called Preface. Preface is the brain around which Microsoft Sideshow is built. We’ve written about the potential for the Preface chipset, and there are a few recent developments that reinforce our opinions here that I thought were worth sharing.
Most people saw the Sideshow announcement as constrained to laptop lids- we continue to maintain that Sideshow (and the Preface chips designed for it) is part of a larger strategy by Microsoft to enter the Personal Media Player (PMP) market. It would appear that Microsoft is now showcasing the Sideshow technology in some of these alternative applications, and that the mainstream press is picking up on this trend.
Well, SideShow isn’t just for laptops anymore. During the Media Center Boot Camp at the Electronic House Expo here in Orlando, Fla., Todd Rutherford, Microsoft Program Manager for eHome Control, demonstrated the technology implemented in a handheld remote. Just because it is a product of Microsoft’s mobility group doesn’t mean the solution must be tethered to a laptop.
SideShow can be implemented on virtually any piece of hardware capable of connecting, whether by WiFi, Bluetooth, Zigbee, Z-Wave, Ethernet, you name it. These auxiliary devices grab “gadgets” from the PC. Gadgets are mini applications that are sent, in an encrypted format, to the remote hardware by the computer.
In short, Preface is an ultraportable hardware platform for many devices and applications.
Also, If you’re interested in Sideshow and what applications Preface can enable, and can endure 20 minutes of amateur video, check out this clip from Robert Scoble (of Scobelizer fame). Just remember, Sideshow is a generic synchronization and consumer electronics technology, not just something that fits into the lid of a laptop.
Microsoft is clearly trying to drive hardware standardization of low-end consumer electronics hardware with Sideshow, much like it has been with Windows Mobile 5.0 for high end mobile devices. It isn’t clear to me that the valueship of a hardware partnership is factored into the value of Portalplayer. Microsoft, like Apple, can be an effective kingmaker in the hardware business. Check out HTC (2498.TW), a Taiwanese company that manufactures many of the Windows Mobile Smartphones and PDAs.
The secondary notebook display is another CES2006 product that failed to get widespread coverage. It’s called Microsoft Sideshow, and was exhibited at Microsoft’s (MSFT) booth under Vista. I learned today that the guts are built with Portalplayer’s (PLAY) ‘Preface‘ chipset. I thought Sideshow was pretty neat when I saw it, and once I learned more about the depth of this new platform the potential impact on Apple (AAPL) and their iPod became clear.