June 23, 2003 — Cell phones. Everybody’s got them. No one thinks much about what’s inside.
Discera wants you to, especially if you’re a mobile phone manufacturer.
The Ann Arbor, Mich.-based company has developed an RF (radio frequency, or wireless) MEMS oscillator and is aiming it at the market for the conventional oscillator technology, quartz crystal. Every mobile phone requires an oscillator to generate radio waves for communication, among other purposes.
Discera, whose lead investor is Ardesta LLC, parent company of Small Times Media, recently began sampling its product. Dubbed the MRO-100T, it is based on the company’s microresonator — a tiny mechanical device that vibrates at predetermined frequencies. Discera is expected to announce a manufacturing partner within weeks.
“The first challenge is to go after a market we know is out there,” said Didier LaCroix, chief executive officer. He said the company has five partners who are evaluating samples. For the long term, he said, there are applications in other wireless communications products, such as remote distributed sensing, radio frequency identification (RFID) tags and more.
This year, 457 million wireless handsets will be produced worldwide, according to Allen Nogee, a principal analyst of wireless component technology at In-Stat/MDR. Nogee estimates that for a midrange to high-end phone with a $100 bill of materials, the whole oscillator section — including packaging — costs about $2.
The challenge for Discera is in convincing customers to abandon an entrenched, known technology in favor of something new — convincing them to go with the devil they don’t know.
What are mobile phone manufacturers concerned about?
“Cost, reliability and size,” Nogee said.
Marlene Bourne, senior MEMS analyst at In-Stat/MDR, said it takes something more to dislodge an entrenched technology. “What’s the value add?” she asked. “There has to be something a little more compelling than saying we can give it to you at the same price or a little bit less or it works a little bit better. What gets people to change?”
LaCroix said Discera’s answer is multifold. He said Discera’s micro-oscillator is smaller, uses less power and can ultimately cost 20-30 percent less than conventional oscillator technology when it is manufactured in volume.
The power savings, he said, could liberate cell phone manufacturers to integrate more advanced features without draining a phone’s battery. The costs savings would increase over time with the company’s integration roadmap, he added. He expects Discera to be in production in the second half of 2004 after spending the first half of next year qualifying product.
Bourne said Discera and Agilent Technologies Inc. are the leaders in the field and that other companies such as Magfusion and Teravicta are applying MEMS technology for switches and relays. “They’re not necessarily competitors,” she said of the field’s players. “There could be some very interesting partnerships.”
For now, at least, the game appears to be about partnering with handset component vendors. LaCroix predicts it will take two to three years for micro-oscillators to be accommodated in the design of their integrated circuits for cell phones. He would like to see Discera technology bundled on the IC by 2005. In 2006, if all goes according to his plans, the technology would be integrated on the IC.
Nogee said that’s a smart strategy. Handset manufacturers, he said, “want to reduce the number of components.”
Such integration was Discera’s original goal. The company was founded in 2001 by University of Michigan MEMS researcher Clark Nguyen with the goal of putting all the electronics and mechanics of a cell phone onto a single chip. Nguyen is now program manager of the microsystems technology office of the U.S. Defense Advanced Research Projects Agency. Though a major shareholder in the company, Nguyen is not involved in operations, LaCroix said.
While the company’s initial product is an oscillator, Discera also plans to pursue filters based on several microresonators, as well as other types of devices. To facilitate adoption, the company is trying to make its wares fit into the product development roadmaps of its partners as well as show its partners ways they could more fully integrate cell phone components using Discera technology.
The company is currently seeking its second round of financing and has grown significantly in recent months. It currently employs 13 people and LaCroix said he expects to hire as many as 10 more — for business development and supply chain management, among other purposes — by year’s end.
755 Phoenix Drive
Ann Arbor MI 48108
Discera was formally incorporated in July 2001 to spin off technology developed at the University of Michigan.
Small tech-related products and services
Discera is developing MEMS-based components — micro-oscillators and resonators — for communications applications. Potential clients include wireless handset manufacturers and companies specializing in radio-frequency (RF) integrated circuitry. Discera’s products are intended to lower cost while heightening the power and “quality factor” (frequency selectivity) of wireless communications components.
In April 2001, Discera received $3.7 million in first-round funding from Ardesta LLC (also the parent company of Small Times Media). The company is seeking a $5 million second round of funding.
Barriers to market
Discera will need to convince potential users of the benefits of changing a key technology within wireless communications, and of the value of high-Q (quality factor) components. Additionally, other products exist that compete with MEMS-based RF components. Probably the greatest barrier facing Discera is the telecommunications slump, leading to slow-moving handset inventory.
Why they’re in small tech
“How often do you come across a technology where you can replace an entire communications circuit board with a single chip?”
What keeps them up at night
“Limiting ourselves to one market when the technology is suited to so many applications.”
Besides competing with other companies developing MEMS-based RF components, Discera also competes with developers of more traditional oscillator and resonator technology. Selected competitors in each of these groups include:
— Research by Gretchen McNeely