Unnatural opportunity in M2M

by Steve Blum • , , , , , ,

Consumer electronics products have a natural limit to growth. With only 7 billion or so people on the planet, even if some people buy more than one of any gizmo you can’t get past, say, 10 billion deployed units within the life cycle of any given product category.

Of course, that’s a theoretical limit, as a practical matter even one billion is wildly out of reach for the vast majority of products. The mobile phone has hit the 6 billion range, because it’s a personal item rather than a family purchase, such as, for example, a television.

There’s no such natural limit in the M2M (machine to machine) telecommunications space, though. There are billions of machines that will have need to communicate with each other in the future, and each of those machines have internal components that might need to swap data too. That puts M2M’s market potential in the tens of billions in the coming decade alone. According to Ericsson CEO Hans Vestberg, it’ll be north of 40 billion by 2020.

That’s why early stage, core M2M technology companies are interesting to track. RFaxis is one such. Founded in 2008 with friends and family financing, this fabless semiconductor start-up makes front end chips for WiFi and ZigBee (and similar) radios.

Their secret sauce is a pure CMOS, single chip integrated front solution that combines antenna switching, power amplification on the transmit side, low noise amplification on the receive side and an interface with the transmit/receive module. RFaxis has attracted customers such as Gemtek, NXP and Freescale.

ZigBee-based smart meters are one of the segments that they see as having breakout potential for consumer-side M2M products. The opportunity begins with the smart meters themselves, but will quickly balloon once connected products, such as thermostats and energy consumption monitors, gain the backing of utility companies.

RFaxis currently has 27 employees and had revenue in the $2 to $3 million range last year. In 2012, they’re expecting to hit the $15 to $20 million range, which will, they think, make the venture self- supporting. Beyond that, there’s no natural limit.