We caught up with Nigel Toon, CEO of picoChip at the revent Femtocell World Summit. In this interview, Nigel explains what he plans to do with picoChip’s recently raised $20 million investment funding, shares his views on the state of the femtocell marketplace and how picoChip plans to address it. We've also recorded a 5 minute video interview with Nigel taken at last month's Femtocell World Summit.
What’s your impression of the state of the femtocell market at the moment?
We are seeing the engineering groups in “tech savvy” carriers moving more quickly than others. They recognise the need to address the growing demand for data capacity by using smaller cells.
The question many operators are asking today is about the business case – “How do we position femtocells or is this a just a defensive strategy?”. The business case/proposition for femtocells could cause the market to grow very quickly, as soon as next year.
If you compare femtocells with other new technologies, you can see the chip vendors who address these market niches building huge businesses by being designed in early and staying ahead. Examples include Atheros for Wi-Fi chips and CSR for Bluetooth. Disruptive technologies such as these allow new emerging players to dominate.
Was it difficult to raise the extra $20 million investment announced last month?
Financial markets are quite different to a few years ago, but venture capital is available for early startups (so called Series A and B money) or those in the later stages close to profitability – it’s those companies somewhere in between that are finding it most difficult. Our latest round of funding was oversubscribed and will enable us to scale up to meet the growing demand for our products.
Generally, our business is going really well with a rate of growth from Q1 to Q2 of 50%. We also have a healthy order pipeline that made it easier to convince our backers to invest.
The money gives us time to build the business – we no longer have to do an IPO by a specific date.
What do you plan to spend the money on?
Our operations in Bath are split across two sites today. We will consolidate our staff into a single site, remaining in the centre of Bath. This is an older style building refitted with a modern interior, and we hope to be in by August.
We are also expanding our R&D centre in Beijing, doubling the number of engineers there. The Chinese team will develop software while the silicon design remains in Bath. We’ll also be increasing our customer engineering activities.
The investment also increases our working capital, ensuring we can fund our rapidly growing turnover.
What additional markets are you planning to address?
The original concept of a residential femtocell has already been realised. We are now seeing larger and more powerful products targeting the Enterprise/Business market. The industry has also moved on to address public spaces (metro-femto) and outdoor rural applications.
We are seeing a very active market, especially in Asia, where femtocells provide a low cost capacity enabler for mobile services.
Our new product plans will provide higher mobility [ed note: handle faster moving users, such as in cars rather than stationary/walking], longer range and greater traffic capacity. We may offer a premium range of femtocell chips with higher specification and capability than those required for simpler residential needs.
For example, one of our customers provides an outdoor femtocell with battery backup and higher power RF. This provides good 3G infill/capacity at low cost with a range of 200metres, but capable of up to 2km range.
In the long term, we have a vision that one day all cellular base stations will be made this way.
What are your LTE plans?
We are already set to conduct trials with several carriers this year and expect to see commercial femtocell products in 2011. LTE deployments should start to ramp up in 2012.
Our tests have shown a dramatic contrast between femto and macro performance for LTE of some 8:1. This is because LTE uses a variety of techniques to squeeze the most out of the radio spectrum. Modulation using 64QAM needs very high signal to noise ratios to achieve the peak data rates seen in lab tests, and performance benefits drop off quickly with range in real world scenarios.
The end user experience is some 8x higher speeds when using LTE femtocells. The small cell architecture has been built into the LTE standards from the start.
There are more than 20 different femtocell vendors today, do you expect more?
We are seeing OEMs (Original Equipment Manufacturers) sourcing their femtocell equipment from two or three ODM (Original Design Manufacturers) vendors.
We expect in the future that carriers will start to buy direct from ODMs and the number of our customers will continue to increase.
There are already some carriers actively trialling ODM femtocells although today all commercial deployments are from the well-known femtocell pioneers.
We also recorded a video interview with Nigel at Femtocell World Summit in London in June.
You can view this below and on YouTube.