The Coming Google (GOOG) Phone Has Already Topped iPhone Pre-Sales
U.S. network provider T-Mobile previously predicted the sales of the "Google phone" to reach 700,000 by Christmas this year. However, nearly 1.5 million U.S. citizens have already pre-ordered the G1 smartphone, which functions with Google's Android technology, CNet France reported Monday, October 13th. The 500,000 T-Mobile G1 phones that have been released have already been bought, leading T-Mobile to order a million additional phones. The smartphone will see its commercial launch on October 22 in the United States and will cost US$179, well under the price of the iPhone.
The technology within the G1 smartphone has been kept under wraps and Google's suppliers have signed confidentiality agreements regarding the technologies contained therein. Google hopes the open-source Android software powering the G1 will eventually become the dominant operating system for mobile phones and make handsets compatible with the networks of multiple carriers.
SIRF's (SIRF) Coming Announcement and Patent Portfolio
On Wednesday, October 22, I expect SIRF to make public that the G1's Android GPS feature is provided by the SirfStar III chip which enables GPS to be hard-wired into the handset. The integrated circuits are also small enough that they won't disturb the svelte profile of the GPhone's case. The SIRFstarIII GSD3t chip measures a scant 3.12-mm by 3.17-mm, at a height of 0.68 mm.
This is not speculation, but rather it based on historical news which has been forgotten and overlooked by Wall Street. In November, 2007, the news was that SiRF joined with Google and more than 30 other companies worldwide to develop and deploy Android, the Alliance 's open and comprehensive platform for mobile devices. The companies press release stated:
SiRF is actively working on the Android platform to include some of the more innovative features of Secure User Plane Location (SUPL), a standards-based protocol that allows a mobile handset client to communicate with a SUPL Location Platform (SLP), including transport layer security (TLS) for location privacy and multiple session capabilities to provide the most compelling user experience. SiRF is also implementing support for Android-based assisted GPS (A-GPS) handsets, including mobile station based (MSB) and mobile station assisted (MSA) positioning methods to facilitate the Android platform passing Open Mobile Alliance (OMA) and 3GPP conformance testing for third-party certification.
During the last 13 years, SiRF has built a patent portfolio in the location technology field that includes more than 250 patents awarded worldwide and more than 370 additional patent applications pending. SiRF's patent portfolio also includes some of the early GPS patents that SiRF acquired through its acquisition of Conexant's (CNXT) GPS business in 2003, and Motorola's (MOT) GPS assets in 2005.
Patent Disputes Resolution Favors SIRF and Products Continue to be Shipped
Major players have been frustrated with SIRF's success and have tried to claim patent infringement. However, these disputes are nearly finished and should be resolved on favorable terms, considering the windfall profits SIRF will see from chip sales related to the G1 phone. On Sept 5, 2008, Barron's reported a rumor that SIRF is nearing a settlement of its patent infringement dispute with Broadcom (BRCM). And, on Oct. 10, SIRF announced that it signed a mutual Patent Non-Assertion Agreement with Qualcomm Incorporated (QCOM) covering each party's patent portfolio.
"There is no ban on shipment of SiRF's or our customers' products," said Kanwar Chadha, founder of SiRF Technology. "Meanwhile we continue to provide our customers with products and services to address their needs and ensure that consumers get the full benefits of SiRF's innovations." SIRF has appealed disputes and will likely prevail.
The Wave for SIRF
SiRF Technology Holdings Inc. is now priced incredibly cheap at $1.10. The market cap is just $68.5M and is only a fraction of expected sales revenue derived from its contract with Google. The absolute worst outcome of patent disputes is erroneously priced in, given the settelement with QCOM and rumored settlement with BRCM. SIRF has zero debt, $1.70 cash per share, and a book value of $2.79.
I expect major upside movements this coming week in anticipation of the Google Phone release on Wed Oct 22 with the release of the Google phone. SIRFers should get ready to ride a big kahuna of a wave. I see upside movement for SIRF to the $1.75-$1.80 range over the next few days.
Disclosure: Long SIRF.