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Our analysis (see Technology section) indicates that D2P technology is destined to fail in the marketplace rather than succeed, although only time can prove this fact. Ironically, the announcement and claims surrounding D2P technology are conspicuously similar to the D2D technology that ParkerVision launched in 1996. We explore some key similarities here.
The PVTV business developed and sold automated television studio systems, which allowed television stations to automate the production of news and other programs. ParkerVision invested relatively heavily into the patent portfolio of PVTV, and established a portfolio of about 30 patents and patent applications. ParkerVision started selling systems in 1994 and achieved annual revenues of approximately $10M from 1996 to 2002 (with a peak of $16M in 2000). PVTV revenues began to decline in 2003 as the company focused more and more on its D2D wireless technology. The PVTV division and intellectual property was sold to Thomson, a French media products company in February 2004 for $14M in cash. We note that at the time, this represented about a 2X multiple on prior year revenue. For more analysis, see our old article: Closer Look at ParkerVision’s Video Business
ParkerVision first announced D2D technology in 1996. Despite the fact that this technology was touted as a platform for standard semiconductor manufacturing processes, it took four years (2000) before the company finally announced that it was beginning to provide samples to customers. In 2000, the company expected OEM design wins with volume production quantities expected within the next 4 to 6 months”. In 2001, those design wins did not materialize, but ParkerVision announced a partnership with TI to manufacture its chips using BiCMOS technology and signed a “definitive agreement” with PrairieComm to jointly develop chipsets “for cellular handsets and other wireless devices”.
In 2002, six years after the announcement of the new technology, ParkerVision announced the development and testing of wireless LAN radio transceiver chips, and again stated that they were “beginning to provide samples to prospective customers, with volume production quantities expected within the next 4 to 6 months”. Because the OEM design wins did not materialize, the company changed its strategy to develop the full WLAN transceiver and announced this OEM product in 2003. In the fourth quarter of 2003, the Company introduced its first D2D-based WLAN end-user products. The company announced that it expected to sell 1 million cards per year and developed the capacity to produce cards at the volume. We note that the company never published a single datasheet on its D2D chipsets, so that a comparison with mainstream technologies could never be made. OEM customers also complained about the lack of public datasheets, which hurt the company’s credibility in the marketplace.
In its OEM sales of its transceiver chips or chipsets, ParkerVision faced competition from well-established companies in the industry. Some of these competing companies offer complete chipsets while others offer transceiver chips or baseband/mac processing chips. In this market, many competitors are well-established, have substantially greater financial and other resources than ParkerVision, have established reputations for success in the development, sale and service of products, and have significant advertising budgets to permit them to implement extensive advertising and promotional campaigns in response to competitors. In addition, certain of these competitors have the financial resources necessary to enable them to withstand substantial price competition.
By 2004, OEM sales of D2D chipsets and transceivers did not materialize, so that the company changed its strategy to sell directly to the consumer market. The Company’s WLAN products were targeted at wireless internet data networking applications. These products included a wireless local area networking card, designed for use with laptop computers, and a wireless universal serial bus adaptor for use with desktop computers. In addition, the Company introduced a wireless four-port router for networking applications, and expected shipments to begin in the first quarter of 2004. These initial products were targeted for the small office, home office segment of the WLAN market. The Company’s wireless local area networking card and USB adaptor were sold at a list price of approximately $90. The Company’s wireless four-port router was sold at a list price of approximately $200. The Company’s product development plans over the next twelve to eighteen months at the time included expanding its WLAN applications to products that would incorporate audio, video and voice, through wireless networking.
The wireless division operated in a highly competitive industry. The ParkerVision WLAN products competed with product offerings from a number of companies with established brand recognition and distribution channels, such as LinkSys, D-Link, and Netgear (which collectively account for over 50% of the North American market for consumer wireless networking products while Cisco, Symbol Technologies and Proxim/Orinoco dominate the enterprise market for wireless networking products in North America). Some of these competitors offered their products at lower prices. ParkerVision failed to build brand recognition and distribution. See our article which predicted poor performance in 2004: 2004 Revenue Expectations for ParkerVision
In addition, the Company researched the use of its D2D technology for cordless phone applications. The company also announced a cordless phone consumer product which was stillborn (see our predictions from February 2005: Unrealistic Hopes for ParkerVision’s Cordless Phone). After about one year of effort, the company announced in July 2005, that it was shutting down its consumer efforts, in order to focus again on OEMs. The outcome was consistent with our prediction in February 2005: ParkerVision’s Role in the WLAN Market.
Earlier in 2005, however, ParkerVision announced D2P technology (low cost, high efficiency power amplifiers for cell phones and other wireless devices) as a novel sister technology to D2D. On the second go-around, ParkerVision has commissioned fabrication capability in SiGe technology with IBM. Throughout 2005, Jeff Parker has been touting D2P technology as the next revolution in RF communications, while keeping silent on D2D technology, which was originally supposed to change wireless communications much the same way. The company revamped its website in late 2005, in order to erase all traces of its consumer strategy and to re-brand itself as the offering ESP technology for D2P.
Given the past failure of D2D to make any significant headway into the wireless marketplace, the similarity in claims made by Jeff Parker about the benefits of D2P chips, the delays in delivering samples to the market, and the complete lack of public datasheets indicating real performance, we cannot but conclude that D2P has been launched on the same track as D2D technology, and that Jeff Parker is hoping that public memory does not last more than 5 years.
It is the purpose of this website to remind potential investors of this history. In the case of ParkerVision, we believe that past performance is, in fact, a realistic indicator of future performance. In this case, D2P technology is doomed to failure, although this may not be painfully obvious for another two years.
D2P Performance Promises
During the January 20, 2005 conference call, ParkerVision CEO Jeff Parker explained that power, consumed by heat loss, is a key challenge to manufacturers of mobile and wireless devices. 802.11g devices typically run at 5 percent efficiency and 802.11b devices typically run in the 8 to 9 percent efficiency range. “This means that 95 percent of all the power it takes to run those circuits goes up in heat. It does not come out the antenna in any usable purpose,” Parker said. Claiming a 50 to 80 percent reduction in power consumption with the new D2D technology, Parker said his company, which produces chips and component products, is working with OEMs and others “up and down the supply chain” that focus on high-volume applications. “This is a semiconductor technology and we will thrive on high volume wins,” Parker said. “One challenge with 3G phones is that consumers trade performance for talk time. We can show designers how to get their talk times right back to what consumers are looking for or even beyond.” (eWeek, 2005)
At the Q2 2005 earning call (August 8, 2005), Jeff Parker stated that “As I stated previously,
one of my own personal goals is to close our first design win this year. Based on our latest progress, I continue to be very optimistic about achieving this goal. Since our conference call update, we have made a number of visits both in the United States and abroad conducting D2P demonstrations to various OEMs. Feedback from these demonstrations has been very encouraging. Certain OEMs have now seen enough proof of what the D2P is capable of to now begin discussions with ParkerVision to define how they might incorporate our chips and technology into their products. In other words, the OEMs have seen enough of our technology from the latest demonstrations to begin exploring the details not only of how our technology can be incorporated into some of their products, but also how a business relationship might be formed between the companies. Therefore, it is from these conversations that I believe will come our most likely first design wins.”
At the Q3 2005 earning call (November 7, 2005), Jeff Parker stated that: “As I stated in my last conference call, my own personal goal has been to close our first OEM agreement by the end of this year. The balance that we are working to achieve is to provide the best possible position for the first movers without unnecessarily limiting the opportunity that this company has worked so hard to develop. It’s very exciting that we’ve evolved our offering to be in a position where we have attracted the attentions of multiple top-tier handset partners. What you should take away is that we are not holding out for the “perfect deal” but we are looking to structure a deal that’s best suited to maximize the opportunity for Parkervision’s future growth and that is fair and equitable to the first OEM or two. I hope we can achieve those delicate balances yet this year. That still remains our goal.”
The reality of the D2P business to date is that in December, 2007, almost three years after the launch of D2P, ParkerVision has announced no OEM deals or licensing agreements, and only achieved an ongoing evaluation at ITT. Simply put, Jeff Parker has failed to meet all of his personal goals.