ParkerVision 2005 FBR 9th Annual Growth Investor Converence

June 1, 2005


Jeff Parker


Jeff Parker:  It's nice to be here. I appreciate the opportunity to tell you a little bit about our company and where we are at with our business plans, so let me wait here while just a couple more people are filing in the room and sitting down.

Great. So I'm going to walk you through today in the little bit of time that we've got and tell you a little bit of our background and where we came from and how we got where we are. I'm going to introduce you to the latest technology that the company is bringing to market, which we call Direct to RF Power, or G to P Technology and how that technology has been crafted to go into cell phones. I'll walk you through a little bit of products that are under development for that market space, also walk you through the same technology as it applies to the WiFi, wireless networking space, and then open it up for questions that you might have.

As you probably already know, we are a publicly traded NASDAQ company, we are based in North Florida in Jacksonville. However most of our chip design facility is in Orlando where we are able to recruit people out of the Space Coast in Melbourne and areas down in that part of Florida.

The mission for our company is, we have really developed a skill in our company for how we look at old legacy analog RF processes and are able to create new processes for those same RF signals that can end up in highly efficient digital circuits and digital chips.

Just a quick commentary on RF transceivers and RF technology today: we get excited about the ability to create new architectures for radio transceivers, because if you think about it, wireless communications and especially mobile wireless products today are some of the most advanced products and yet if you look at the analog circuit architectures that they're using, those are some of the oldest architectures that exist in terms of when they were invented and how they were employed.

So the mixers and the local oscillators and the engines of our products today were created back almost a hundred years ago, and yet that's the foundation for the products that are some of the most advanced wireless products in the world today.

We were founded in 1990. We started out as a robotic camera company. We ended up creating tracking cameras that can follow subjects without any camera operator. You would wear a little [xx] microphone that had a wireless radio beacon in it. That's how we got into RF and we ended up starting to use those cameras in video conferencing, distance education, ultimately in broadcast television network.

We have a little over 100 employees in our company today, we're as I say are publicly traded on NASDAQ, and we've invested a little bit over $100, 000, 000 to develop the technology that I'm going to show you here in just a moment.

We basically decided to focus our company exclusively on being a wireless technology provider last year, and sold our broadcast equipment business to Thompson, where they got everything in the broadcast business except for the wireless.

Today we are a bit vertically integrated in that we make wireless transceivers that have been created specifically for networking products. You can go to certain stores today and find our wireless routers, our wireless network cards, USB products. You see them on the shelf under the brand of ParkerVision and Signal MAX and what they sport as their benefit to the consumer is improved coverage and better connectivity, especially for consumers that are trying to connect into DSL and cable modems.

You'd see our advertising where we're guaranteeing entire home coverage, better performance than other networking cards on the market today. We're known by many as having a one‑mile link in an outdoor environment with no obstructions, which gives us the opportunity to guarantee full coverage in the home.

And you see us today in places like CompUSA, J&R, RSC, Microcenter‑‑more of your specialty consumer electronics and computer centers. We've gotten a lot of nice reviews‑‑dozens, maybe hundreds now‑‑from various reviewers who have tested the technology and said 'yeah, they've got greater range than other cards that we've been able to find. Yes, it covers an entire house.'

This magazine took us up on our one‑mile distance claim and they actually ended up getting 1.4 miles and they were like, 'wow, yeah, that really does what the company says it does' which in the wireless world it's not uncommon to be kind of surprising. People make lots of claims in wireless that they don't meet. This reviewer even hooked it up to an Xbox live, which can be a challenging application in terms of reliability and it worked very well.

But the company has evolved and I think for the foreseeable future what you'll see the company trending toward is becoming an OEM supplier. That's really been our goal and our dream. I think the company is on the threshold of making that happen. We've evolved our technology into what we call direct to RF Power components. Those components, as I mentioned earlier, have been developed for cell phone hand sets, embedded WiFi products and convergence products‑‑products where people are trying to put more than one standard or more than one application into the same product.

What is direct to RF Power? It is a very unique architecture that allows us to create very efficient radio carriers‑‑in other words, transmitted RF Power. It allows us to convert any analog or digital data stream directly from that data in a single operation to the RF carrier at power.

It's very unique and I'll show you some diagrams of this. It's implemented in digital circuits that are very small, highly compact and we end up being able to build very small chips that replace quite a bit of circuitry which I'll showcase to you in a couple of applications, what kind of size our technology goes into versus what it's replacing.

So here's a block diagram that today you'd see in a direct conversion architecture in a cell phone and what you'll see here‑‑if you follow the base band processor on the right‑‑it's putting data out going to a transmitter, which then goes through a filter, which then goes through a traditional analog power amplifier and then through the antenna.

We've changed that architecture from those steps to look like that. So we basically take the transmitter and eliminate it, we take the filter and eliminate it, we take the analog power amplifier and eliminate that. It all gets replaced by a small, what we call direct to power chip, which I'll show you in a moment. These chips are being fabbed at IBM and their silicone germanium process.

The chips are being fabbed as both single band chips and multiband chips, depending on what our OEM customers are interested in. They are also single mode capable or multimode capable. Now when I say multimode that means a single chip that can handle CDMA, wide band CDMA, GSM, GPRS, EDGE, WiFi‑‑ literally any data stream and turn it into the right carrier at the right frequency at the right power.

So let me give you some examples of what this particular offering does. If you were to look inside a cell phone application and you were an OEM, the things that you're really interested in are what do you do for my power consumption, what do you do for the cost of my product, how do you help me on size because I'm trying to pack more features in there and by the way, do you help or hinder my time to market?

Here's a block diagram of a typical cell phone. What you see today in cell phones are really three levels of integration. A low level of integration, what we're showing you here, is where you have multiple chips to get to the transmitter, multiple chips for the receiver. You don't see this level of integration too much anymore. People have definitely moved beyond this.

This level of integration where you've got a separate transmit chain from a received chain is typically direct conversion. That's become more common. What you'll see is you still have multiple power amplifiers, or power amplifiers that are in modules for the transmitter and separate material. Typically gallium arsenide versus CMOS or some kind of siggy [xx] for the RF section.

Then, you might see this level of integration, which is much higher, where the transceiver is on a single die with the synthesizer, but even in that situation the power amplifier is typically in a different material and a separate chip. Typically, this level of integration you see more in two G cell phones, 2.5 G cell phones. In this level, you'd see more in the three G. Next generation CDMA, CDMA wideband type applications.

So what we do is we've taken a variety of handsets. These handsets here are all three, four, five months old. These are fairly new handsets. We've done breakdowns of what it takes to build that transmit section if you're building an EVDO/CDMA phone, or how about a regular CDMA phone? Or a wideband CDMA phone? Or a GSM phone?

I won't bore you with all the details on this, but if you look at this at kind of a high level, which you'll see, is that the transmit sections take anywhere from four and a half square centimeters, six square centimeters, four point six, four point six, four, to build. That compares to what we do with the direct to power chip. If you look at the transmit section of this CDMA cell phone, we would turn that section from what you see there into that.

So, a very significant reduction. About 75% less circuit board space required than what the traditional approach requires.

The next thing under the chart that shows you the comparison between these different standards. In terms of component count, today, to build a transmit section for a cell phone it's anywhere from about 75 components for a relatively simple handset up to over 200 components for a more complex third generation handset. You can see with ParkerVision it's in the 12 to 15 component range.

Next thing would be cost. And again, if you walk through these phones, you'll see that cost varies from about five dollars and change to about ten dollars and change, depending upon the handset. If you get to our solution, you'll see that we're in the two and a half to maybe a bit over four‑dollar range, depending on how many bands of operation and how many different modes an OEM would want.

Now we get down to power consumption. This particular part, we are focused on showcasing CDMA, and we'll add to this presentation GSM and some other standards. But CDMA and wideband CDMA are definitely the least efficient modes for handsets today.

The reason for that is the modulation of a CDMA or a wideband CDMA cell phone is a very complex modulation. The analog power amplifiers don't track that very well. So, what you see on a CDMA phone here is when that phone is putting out 17 dBm of power, which is 540 milliwatts, which is where it runs most of its time, it's only four to five percent efficient. So, 95 percent of the power that you're consuming for that transmit section is going up in heat, and only four of five percent of that's coming out the antenna.

And what we do for that is we take that up to 22 to 26 percent efficiency, which is a huge increase in efficiency, as you can see on this chart: a traditional power amplifier and its transmitter running about six percent. What we're showing there at 10 percent is what people are talking about doing with next‑generation analog power amplifiers. They're hoping to pick up three or four percent. And we, with our first generation on Direct2Power are in the 22 percent range if you're using an analog interface and almost 27 percent if you're using the digital.

So if you translate that to actual power consumed, on the right‑hand side of this chart, you'll see they're consuming anywhere from three‑quarters of a watt to close to a watt, and we're consuming around two‑tenths of a watt. And what that translates to, by the way, is 40 to 50 percent less power consumption of the battery, of the whole product. So you can almost double your talk time, just by improving the transmit section to this degree.

This chart here is showing you what happens when this handset runs at full power, which it doesn't do that often. But when it does, what you'll see is that the traditional analog amplifiers are running at about 30‑32 percent efficient.

The problem with that is that's a theoretical number, and so, to get a manufacturing margin in there, you have to do what's called "back off." And when you back off of that power amplifier to get manufacturing margin, you're really only running about 20‑25 percent efficient. We're running at 50 percent efficient, and we have no back‑off. And we have no back‑off because we don't put RF in to get RF out; it's data in. So we don't have the same kind of manufacturing back‑off requirement on this type of an architecture.

What the chart's showing on the far right is OEMs say to us, "Have you guys squeezed the last efficiency percentages out of your technology?" And the answer is: "Oh, not even close." I mean, this architecture has a lot of improvements that we will make over time. And we predict, over the next 18 months or so, that we can actually push those efficiencies into the 70 percentile, maybe even close to 80 percentile, efficiency range. So there's a lot of gains yet to be had with this technology.

I won't bore you with this chart, but this just shows you, if you were to benchmark us against some of the power amplifiers that are commonly found on the market, how do we look? And we look very good, especially as you start looking at those back‑off numbers. They're down to only about 20 percent efficient.

So, at this point of a presentation, an OEM would say to us, "There's nothing I don't like, so there must be something I'm not going to like. It must be, maybe, in your performance of what the waveform looks like or what the spectrum of your transmitter looks like." And so, these numbers here are basically showing you the way, especially on CDMA, the spectrum is measured is in what's called ACPR one and ACPR 2.

These are the first and second side lobes that a spectrum that's regrowth from your transmitter is undesired spectrum. And the perfect spectral regrowth on side lobe one would be ‑100 DBC. Nobody gets there today, including us. The spec calls for ‑40. And the second side lobe, the spec calls for ‑50.

What you'll see is that we are six to seven DBC more margin than what the spec calls for, worst case. And more typical, we're 10 DBC better, which is plenty of manufacturing margin.

We show you different power amplifiers here and how we stack up against those, and what you'll see is we're right in there with the best class of power amplifiers on the market today. So there's nothing not to like. The one thing that is notable about our performance, though: as you'll see, we run our power amplifier at 3.3 volts to get 28.5 dBm out. Our competition has to run at 3.4 to 3.5 volts. And that's just another showcase of why we're more efficient.

This slide here is showing that we are an easier component to design into a handset. Today, a handset, when you put a power amplifier in, you have to do what's called "matching components, " for RF in and RF out. We only have matching components on the RF out portion, because we don't have RF in; it's data in. So, RF designers like that, and that makes it a little easier for them to get their product designs in time to market.

This is just a chart here that showcases that we save a lot of size, a significant amount of cost, obviously excellent power‑consumption savings, and we help in time to market. So we would basically showcase that we think we've hit a sweet spot with what people are looking for in this part of their handset puzzle.

Here's a couple of chips that are coming out in the second half of this year. This chip is a platform chip. And what it shows you is that you take the frequency from the synthesizer, which is what sets the channel on a handset, and you take the standard synthesizer and you put it into this chip. You then have a couple of pins that can select whether this is going to output channel one, two, three...

In other words, it has four bands in this one chip. So, two PCS bands, a cell band, and then a fourth band, which is provided for people who may want to do a WiFi or a Bluetooth. And then you put in any analog or digital IQ signal, and this chip will process that. And here's the size of the chip, which is a five by five millimeter, which is very small. And here's the pin‑out, which I won't bore you with, but obviously designers are interested in that.

And then here's a single band chip, for a person that just wants something that's extremely limited and the least expensive thing we can build. It's a four by four millimeter package, so, very efficient. Same kind of thing.

Today, the company is now in dialog with a number of OEMs, especially handset OEMs. We've gotten very positive reception to the technology and to the products that we're doing.

We're starting up the demonstrations now to OEMs. They hear the story you've just heard, and the next thing, inevitably, they say is, "Hey, show me. If it's this good, I want to see it." And we have a demo platform we've created that lets them literally put in anything‑‑CDMA, wideband CDMA, GSM, anything‑‑and out the other side of this platform comes the desired carrier with the specs I just showed you.

We hope to be able to sample fully integrated chips to these OEMs a little later in the third quarter. Probably in the August‑September time frame is our belief right now. We seem to be tracking on that right at this moment. And then, pre‑production samples a little later in this year, and hopefully securing design wins with certain OEMs and starting up production with them, probably not late this year. I think, by the time you get through the design‑win process and the contract process, it probably looks more like the first part of next year.

We also have this offering crafted for WiFi because, as I said, it's agnostic to what kind of data goes in, I'm not going to spend a lot of time on this, other than to showcase it's the same story. You take multiple components: you replace them with a direct‑to‑power chip, which could be using someone else's receiver, or our own receiver, because we've already got a receiver for WiFi.

Our cost story here is a little different. WiFi transceiver costs are already pretty efficient. We're in that $1.75 to $2.50 range for the transceiver chain. You can see those transceiver chains today in about the same ballpark. Where I think we bring a lot of value to the WiFi space is we don't require any shields at all in our transceiver products‑‑never have. And we also provide a lot more efficiency.

So it's the same story as the cell phone handset. Today, an 802.11G transmit chain is only about six or seven percent efficient. We're running up in the 20 percent range, which is significant. And in WiFi, we have the opportunity to bring more power. You can't find, today on the market, WiFi power amps that are more than about 18 dBm, 17 dBm, output power. So that limits the range.

In the FCC specs, you can run a WiFi node up to 30 dBm, up to a watt. And today, people are only running about 60 milliwatts. So, as you can see from our chart here, we have chips that will be coming out that actually allow you to go all the way up to a watt on.11b, and up to 27 dBm, which is half a watt, on.11g. And the benefit to that is it allows you to have much better distances, just by including our power amplifier technology. You don't have to change anything else out in your system, and you'd get two to four times the distance on your WiFi products.

We're also discussing with OEMs their interest in putting a single‑chip solution together for WiFi for handsets. You're probably reading more and more in the market about people including WiFi in, especially, smartphones, and we think there's a real market for that over the next three or four years.

We already, today, have our own transceiver, synthesizer. Obviously, now, we have our own power amplifier technology. And so we're in the discussions with handset OEMs about putting together a single package for all that for their handsets.

There's a lot of interest in that, because what we would end up bringing to them is much more distance at the same power consumption they use today, or making much less power‑consumption and getting the same distance. And again, if you're working in a handset environment, you don't have a lot of battery to work with, so they're always looking for, "How am I going to add these features without having more battery consumed?"

The other offering of the company as we're out talking to OEMs is, as you know, we're through the retail space, already selling WiFi products. So we have started to engage OEMs in dialog about using our chips in their WiFi products. And what we talk to OEMs about is: here's a chart that shows our 802.11b products.

The first area here you see, on the left, is the typical distance that is achieved with today's analog transceivers. That blue line which goes out to about 6, 000 feet is what we actually get in open field environments. If you just used a ParkerVision transceiver on one end of a network, you would more than double the distance, even if you were using someone else's analog transceiver on the other end.

And then we've been working to bring to market our 802.11g product, which we're getting very close to. And if you'll look at this chart here, what you'll see is, all of these‑‑the yellow, red, purple lines‑‑that's today's 802.11g products, which typically, in an open field, are going to get you 1, 000 feet, maybe 1, 500 feet. The purple line there that goes out to 2, 000‑plus feet is actually the MIMO products that are on the market today, with the multiple antenna schemes.

And this brown line that you see that goes all the way out to 6, 000 feet is our 802.11g product, which, as you can see, keeps 10 megabits all the way out to a couple thousand feet. The reason we think OEMs will find this interesting is there's a real trend in the market today: "How am I going to use WiFi to move video around my house, or audio?" Media nodes. Multimedia applications. And what you really need in an indoor environment is you need about 10 to 12 megabits for video, or more, and you want that at the longest distance you can get.

The dotted brown line that you see there is our prediction that if you were to use our direct‑to‑power chip, with its extra power output, that's what you could do to that g line. You could take that 10 to 12 megabits all the way out to about 4000 ft.

And, some of the conversations we've had with OEMs and ODMs have been a lot of interest in this. Because, as I say, they're struggling today to figure out how to move multimedia around. And, currently, the industry has been trending to this MIMO solution, but it's expensive and it's complicated. And this shows them that there's another way to do that.

By the way, the direct‑to‑power chips are also very applicable to MIMO applications. So, there's a lot of different ways that we think Parker Vision can be a resource to the OEM marketplace.

The company has spent a lot of time securing its intellectual property. We use a firm in Washington ‑ Stern, Kesslar, Goldstein and Fox ‑ which has a lot of experience with technology companies. They've been an IP counselor to Qualcom, to Broadcom, and to a number of significant technology companies. And, they've been our strategists for intellectual property from the beginning of our IP portfolio.

We think that the technology's protection through IP is ultimately going to be very important. And, so we spend a lot of time and effort, and dollars on making sure that the patents are going to cover and protect our intellectual property from a lot of different angles.

So, that's basically a quick walk‑through through the Parker Vision Company. And, I'd be glad to answer questions that, that you might have.

Yes, sir.

[Audience question]


[Audience question]

The company's focus has always, and the belief has always been, that the best leverage point for this technology is within the OEM, it is to become an OEM provider.

When we brought to market our direct‑to‑data chips a couple of years ago, we were hoping to get OEM traction then. And, you know, we can speculate and talk a little bit about why we didn't traction with our direct‑to‑data transceivers. In my opinion, we were asking the industry to swallow a sandwich in one bite. Our direct‑to‑data transceivers, which kind of sit at the heart of the system, make you change an awful lot around what we put in there ‑ to adopt us.

We decided that when we were having difficulty getting adoption with the transceiver, that we needed to prove that we could bring this technology to market that it was stable that we could manufacture it ‑ that it would do what we said it would do.

I think we've done that. And, frankly, it's gained us a lot of respect with some of the OEMs we're talking to. I mean, a number of them have gone out and bought the product and put it into their own homes, and said, yeah, the product does what you say it does.

The reason we've evolved to this direct‑to‑power technology is, once we saw the resistance at the OEM level, we said, what do we need to do to this technology to make it an easier adoption curve for the OEM? And, so, it's no accident that this technology fits into their platform without asking them to change what they do. We use their standard data that comes out of their processors. We use the synthesizer the way it comes out of their synthesizer. The only thing we ask them to do is to eliminate a bunch of parts, which frankly has been, so far, very well received.

So, I believe where we are at today as a company is we are finding our way back to where we wanted to be a couple of years ago which is to become a real asset and resource and a trusted provider to the kind of OEMs that can make this company cash flow positive and profitable.

When will we get our first design wins? That is really is now probably the question in your head. And whatever I predict, I'm sure I'll be wrong, [laughs] so I hate to give you a date with a projection on it. But I can tell you that the company is in dialog with a number of OEMs in both the handset and the WiFi space.

And the reaction we've gotten to our direct‑to‑RF‑power chips thus far has been extremely different‑‑much more positive, much less skeptical, much more welcoming‑‑than we got on our Direct to Data transceivers. So I think we're finding our way back to where we wanted to be as a company, and I believe that you'll see design wins from the company with significant names in the industry. And once we do that, of course, then I think the company is on the right track to building the kind of revenue that you would expect out of a $100 million investment.

Yes, sir?

[Audience member speaks off‑microphone]

Jeff Parker:  At this moment, we haven't seen anybody in the market who actually has hardware that does what I described, that takes you from a data signal right to an RF power carrier with no transmitter. So that's a unique offering. There have been people out there talking about doing that, but they've all been using architectures... by the way, that's known as a polar architecture. And we actually cite polar architectures in our patent applications.

There's a lot of reasons why polar architectures aren't on the market today. If you're trying to do CDMA cell phones, wideband CDMA cell phones, or OFDM WiFi, which is.11g and ultimately.11n, I don't believe you're going to do that with a polar architecture. So I think we have found a very unique and well‑protected way of doing what people have been thinking about doing, but nobody has been able to achieve to date, in terms of on the transmit side.

In terms of, are we behind the eight ball in finding OEM adoption? So far, the OEMs we've talked to have said to us, "We haven't seen anything like it. If it does what you say it does..." I mean, these guys are designing their next‑generation handset platforms all the time. Depending upon what company you're talking to, you're going to run into OEMs who are in various stages of how they get ready to do their next cell phone platforms.

But at this point, the reaction we've gotten from OEMs has been: "Show us that the technology works for your demonstration platform, and we're ready to talk about how to do business." I haven't heard from OEMs, any of the names that you mentioned of the traditional power amplifier providers, having anything like this.

Yes, sir?

Audience Member:  Assuming you got a design win, how long would it be from getting the win to actually a lead time to getting it into production?

Jeff Parker:  In the handset market, from the time you get a design win to the time it's a production item, typically is about 12 months. In the WiFi space, the design win to the production is a lot shorter‑‑shorter being maybe four to six months. The difference, of course, being when someone designs you into handset, it's usually you're going to be designed as a platform, right? You're going to be designed into some platform which is going to be creating 10 or 12 or 15 different models of handsets.

So, typically, although the handset design end‑time takes longer, you're also talking about much, much larger volumes. And with the WiFi space, although it's much quicker, the volumes are typically a lot less. So those are kind of the trade‑offs that we see.


[Audience member speaks off‑microphone]

Jeff Parker:  OK. Great. Thank you, guys, for your attendance, and we appreciate the opportunity to tell our story.