Broadcom (BRCM, Financial) has gained impressively after deciding to exit its baseband business last year. In my opinion, Broadcom can now focus on areas with strong growth potential, including the Internet of Things and small cells. As discussed in this article, it is clear that both these markets are expected to be worth billions of dollars in the future. As a result, it is important for investors to take a closer look at the end-market opportunities, and also focus on how Broadcom plans to attack these areas by way of product development.
Tapping the small cell market with efficient products and partnerships
Small cells are a key growth opportunity for Broadcom, and the company is aggressively introducing new products to tap this market. This is not surprising, as small cell adoption is expected to grow at a strong pace going forward.
The small cell market will be worth as much as $2.7 billion by 2017, and Broadcom seems well-positioned to tap this market with its new products.
Broadcom is targeting this market by introducing its next-generation devices for outdoor small cell, enterprise, and residential networks -- the BCM61765, BCM61755, and BCM61735 system-on-a-chip (SoC) devices.
These third-generation low-power small cell baseband processors double the capacity for carriers and operators to offload data traffic from highly congested Wi-Fi (802.11n and 802.11ac), 3G, and 4G/LTE mobile networks. These new chips allow for data rates equal to 300 megabits per second ((Mbps)). This process, known as densification, allows telecom service providers to serve more traffic and improve speeds, even in congested areas.
Moreover, Broadcom's overall small cell platform also allows support for Wi-Fi offload, which allows small cell technologies to provide added assistance for operators in controlling an expanding mobile traffic by leveraging its dual-band concurrent 801.11ac and 802.11n Wi-Fi technologies.
Additionally, Broadcom is collaborating with Radisys to jointly launch Trillium LTE TOTALeNodeB 2.0, utilizing Broadcom 617xx Series small cell silicon. The combined solution will allow mobile operators to implement LTE-TDD and LTE-FDD small cells to expand the required bandwidth and subscriber coverage, and improve spectrum efficiency at the same time.
Thus, it is evident that Broadcom is trying its best to tap the small cell market with both products and partnerships. As the market continues to develop and Broadcom's product development matures, there is a good chance that the company will see financial gains from its investment in this segment.
The opportunity in the Internet of Things
The Internet of Things is another key opportunity that Broadcom is looking to tap. The company is targeting this market in a strategic manner by deploying a development kit, known as WICED, which can be used by developers to create applications.
WICED Sense is an integrated prototyping kit including Broadcom sensors, Bluetooth chip, and a set of software that enables syncing to tablets or smartphones. The kit is cost-effective, and lowers the creation time of Internet of Things products. Looking ahead, the need for connectivity chips is going to increase as more devices get connected to the Internet.
Thus, Broadcom has done the right thing by bringing out a cost-effective development kit, as developers can now develop more applications based on Broadcom's chips.
Conclusion
Broadcom's focus on areas such as the Internet of Things and small cells will allow the company to grow at a good pace in the future. Thus, even after delivering strong gains in the past year, Broadcom looks primed for more upside.
