Comments on: Why Amazon might buy TI’s mobile chip business

By: Adrian Meli

Adrian Meli — Fri, 19 Oct 2012 00:29:53 +0000

Seems like quite a shift in strategy for them, but people have said this many times before. They are very good with their investment dollars so there may be an interesting angle as you suggest where they can justify it on their current business but have some optionality in other areas.

By: ameyamitr

ameyamitr — Tue, 16 Oct 2012 06:25:55 +0000

Amazon Phone may be the ‘prime’ reason. They would have tighter control on their hardware costs. They would probably make money out of the hardware as well (unlike the Kindle series) and yet stay focused on selling content.

By: Jiri

Jiri — Mon, 15 Oct 2012 17:34:38 +0000

Amazon start to be quiet popular in Europe and you can find Kindle E reader in public libraries. I believe they will be well in years ahead.

By: keninca

keninca — Mon, 15 Oct 2012 17:08:26 +0000

This would be crazy if Amazon did actually do it, as it would be difficult to justify the investment. Amazon would basically be buying IP and a huge team of engineers, which would cost hundreds of millions of dollars each year. The payback? Maybe $5 per device. If they could achieve Apple-like volumes, they could justify it but that’s unlikely. Also, Apple actually makes money on their phones and tablets.

I know that Amazon say they make money when people buy stuff from Amazon on their kindles, but the important metric is not how much they make on those sales, but the differential between the revenue generated on these devices and what they would have made anyway. It’s not like all those sales never would have happened if people didn’t own kindles; most Kindle owners were probably already loyal Amazon customers. Can they justify $1 billion or so to buy the unit and then hundreds of millions more each pear to operate it (if their savings from owning the SoC IP is only $5/chip, they need to sell a lot of devices to just break even).

The more hardware Amazon designs, the less they will sell from other manufacturers. They need to understand their real value, which is retailing. Designing hardware and software is not cheap, and is unlikely to be sustained from thin margins on content over a long period of time.

By: David Anders

David Anders — Mon, 15 Oct 2012 17:02:59 +0000

using OMAP as a server is already being done for many applications. currently sandia labs as well a wide range of universities use OMAP3 and OMAP4 for parallel computing projects. it is a very short step to mass production servers….

By: jjj

jjj — Mon, 15 Oct 2012 14:29:53 +0000

“chip fabrication production lines.” oh my what a stupid thing to say, are they buying UMC now too?
Anyway,Amazon doesn’t have the volume now to justify making their own chip,maybe when they sell at least 20 mil units/q but that could be more if they make more than 1 chip that fits all.So if they do buy OMAP a phone is pretty much a certain thing since other phone makers are unlikely to use their chip and they will have to generate enough volume to justify the dev costs.
Another big problem is that they won’t have a baseband and sooner or later they will have to integrate one so that would mean another buy (ST-E might be a better buy already).
Moto isn’t using TI in it’s new models this year,last year they used Nvidia and TI,this year they went for Intel and Qualcomm.

By: Kevin C. Tofel

Kevin C. Tofel — Mon, 15 Oct 2012 14:23:43 +0000

I see your point for sure, Tsahi. If Amazon were to spend billions, however, I see it as a long-term investment; not a short timeline. Still, you could well be right. Thanks!

By: Tsahi Levent-Levi

Tsahi Levent-Levi — Mon, 15 Oct 2012 14:20:07 +0000

Kevin,

This is a huge leap to make – using OMAP chipsets on servers. While I’d love to see that happen, I can’t see it come to fruition in the foreseeable future. Amazon must be able to bank such an acquisition from Kindle sales alone.