Nov. 19, 2004 — The makers of digital television sets continue to offer pictures that are more and more clear, but the image of which new digital technology will ultimately prevail in that market is, well, a little blurry.
Among the contenders is a MEMS-based technology pioneered by Texas Instruments known as digital light processing. Until now, TI has effectively owned the market for rear-projection televisions that use micromirrors, but three other outfits developing MEMS projection technologies could challenge it in the years ahead, creating more price competition and presenting consumers with a potentially dizzying array of technology choices for the living room boob tube.
The digital television market has entered a period of rapid growth, according to a report issued Wednesday by market research firm iSuppli Corp. The firm credited the growth to the availability of new digital technologies and to regulations requiring U.S. television stations to transmit digitally by 2007.
Earlier in the week, McLaughlin Consulting Group issued a report claiming sales of TVs using MEMS and related technologies could increase twice as fast as earlier predictions if consumers continue to put more value on large screen size than flatness.
“There are different prices and form factors that [correspond to different TV display technologies like LCD, CRT, or MEMS approaches],” said Steve Marsland, principal researcher at McLaughlin and author of its report. “I think that framework is going to be in place for some time.”
The three MEMS display companies raised a total of $41.75 million in the third quarter, according to a Small Times analysis of the MoneyTree Survey by PricewaterhouseCoopers, Thomson Financial Venture Economics and the National Venture Capital Association.
Keyotee Inc. of Austin, Texas, raised $1.25 million. Miradia Inc. of Santa Clara, Calif., raised $22.2 million. Reflectivity Inc. of Sunnyvale, Calif., raised $18.3 million. In addition, a company developing MEMS technology for cellular phones and other handheld devices, Iridigm Display Corp. of San Francisco, raised $10 million.
The global market for digital televisions is projected to be worth $62.8 billion in 2008, according to the iSuppli report, up from $31.4 billion 2004.
Conventional wisdom would suggest these startups have a tough row to hoe. They are developing technology aimed at an established market with powerful players. There is a gaggle of competing next-generation display technology categories. And the category they are in — MEMS-based microdisplays — is already dominated by Texas Instruments, which commands a many-decades-long head start in product development.
Adding insult to injury, MEMS devices are notoriously difficult to engineer. Unlike the integrated circuits to which they are so often compared, MEMS devices usually require non-standard processes and specialized packaging in order to build and protect their delicate moving parts. Technology innovation could be a differentiator. Miradia, for example, uses standard CMOS processing, according to Chief Executive Officer Greg Miller.
However, each startup is backed by or affiliated with, powerful players who could help offset the technical challenges. Keyotee’s venture backers are blue-chip technology investors Sevin Rosen Funds and Venrock Associates.
Miradia likewise boasts an accomplished venture syndicate and is working with wafer and mirror manufacturer Taiwan Semiconductor Manufacturing Company Ltd (TSMC), one of the world’s leading semiconductor fabs, for manufacturing. Reflectivity’s investor group includes Acer Technology Ventures, the venture arm of Acer Inc., a global PC provider with $4.9 billion in revenues in 2003. In short, this crop of startups comes with stellar connections.
Inasmuch as such connections could provide the companies with the manufacturing partners and customers they need, they also serve as likely routes to acquisitions for the companies if they are successful. For example, Qualcomm recently purchased Iridigm, the company developing a MEMS display for handheld devices, for $170 million. Prior to the acquisition, Qualcomm had already owned approximately 14 percent of the company.
Should any of these technologies make it, they will encounter a rapidly evolving marketplace already littered with a gaggle of technologies that include LCD, CRT and plasma. And despite recent announcements from Intel and Philips that they would not pursue previous plans to commercialize a next-generation LCD known as LCOS, or liquid crystal on silicon, experts say LCOS will still make it onto the high end of the television market.
As a result of so many choices, says Marlene Bourne, senior MEMS analyst at In-Stat/MDR, new players will be forced to spend significantly on branding. Previous generations of television technology were dominated by a single technology such the cathode ray tube or liquid crystal displays but, she says, “digital TV is wide open.” The existence of so many branded technologies “almost requires these startups to take the same approach.”