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Zigbee ... The Problem Child with the Funny Name? | Print |
Written by Akiba   
Monday, 25 February 2008

 

One of the dev managers at Farnell, a chip distributor in Europe, posted this article on Electronics Weekly titled "Zigbee - Problem Child or Future Success". In it, he discusses the problems that are facing the Zigbee standard, and some of the advantages about it as well.

There are some interesting points he makes that I really believe is true. Despite what the marketing research companies say, the Zigbee market is not one large market that is going to be XX billion units in 20XX. Its basically a fragmented market, where each application has its unique requirements and the total volume of one project won't be very large. For example, in the consumer market, if you land one deal with Samsung to get your chip on their LCD TV board, you are looking at potentially 3-5 million chip sales per year. That means that you only need to land a few of those deals to put your company in the > $20 million revenue category.

The industrial market on the other hand is similar to the small business market where each small business has its unique needs. The other similarity is that the overall revenue from one category in a fragmented market is not very big. That means that you gotta do a buttload of projects if you want to be a high revenue company. In an industrial market, instead of having one huge customer, its more common to have many customer that are buying, say 10,000 units/yr. If the part is $2, you need to get 50 customers to achieve a revenue of $1 million per year. If you want to achieve a revenue of $10 million, you need 500 customers. Its quite difficult for a small organization to service 50 customers much less 500 customers, which is why Zigbee is a challenging market. Thats also the reason many venture-backed companies are aiming at the consumer industry instead of the industrial. I mean, how many video startups do you see compared to robotic arm control startups?

That's why Zigbee is a good candidate for open source. Many of the venture backed or large conglomerate Zigbee companies won't be focusing on the small to medium size customers which probably make up most of the market. These customers are usually referred to as Tier 2 and below. In that case, it makes sense to try and build a community that can provide its own support and help each other out.

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