New chips will create the gadgets of tomorrow by Todd Woody @FortuneMagazine January 14, 2008, 7:46 AM EDT E-mail Tweet Facebook Google Plus Linkedin Share icons By Michael V. Copeland If you want a hint at where innovation in the gadget world is headed, talk to the chip guys. These nuggets of insanely complex silicon that companies like Intel, AMD (AMD), Atheros, Broadcom and Marvell (MRVL) are creating today will end up in the phones, laptops, televisions and mobile video/music/Internet devices of tomorrow. We all know that Intel is dead-set on making WiMax — wireless access measured in square miles — a reality. When they start shipping WiMax PC cards in laptops is another matter (Intel (INTC) said it’ll be around the middle of the year), but when they do, your laptop might start acting and looking more like the tidy mobile device it should be. Think about a sub-subnotebook machine, always connected to a broadband signal — it might make video calls via VoIP, stream movies, take photos and send them wirelessly back home or to the office. I want one now, but it doesn’t happen without the chipset (and the network infrastructure to go along with it). That’s a ways in the future for most of us, especially in the United States. But the capability is coming soon, and a raft of new gadgets that take advantage of it will follow. One of the most interesting chip trends I saw last week at the Consumer Electronics Show in Las Vegas was encapsulated in a little device called the Eye-Fi. Here’s a gadget that exists today, but has lots of implications for tomorrow. What the Eye-Fi does is automatically stream photos from your digital camera via your Wi-Fi network to your PC or an online photo service. What the Eye-Fi team has done essentially is wrap a service around a common flash memory card and a low-power Wi-Fi chip from Atheros (ATHR). It’s these lower power Wi-Fi chips that are extremely interesting, when you start thinking about other services they enable. All the manufacturers in that realm of the chip business are working on prototypes that are as power efficient and powerful as possible. But think about all the things that can happen if you can put Wi-Fi into all sorts of mobile and fixed devices and connect them to either the Internet or a private network. Gadgets get smart and can receive, send and potentially respond to whatever information they are set up to handle. It could be smarter light switches that turn off and on via an e-mail or text message, or LCD picture frames that stream your e-mail to your bedside and upload a recipe to the kitchen screen every day before dinner. Or maybe some slick mini-display that scrolls updates from your Facebook friends on one side, reads you the news on the other, and does any number of other things that you find important or entertaining. Who knows? The possibilities are numerous, but it begins with these chips now starting to ship. It also calls into question the future of other wireless standards like Bluetooth and Zigbee. Zigbee, a low-power wireless technology, has never really taken off. Bluetooth has, but combining Bluetooth with Wi-Fi in devices is much more of a headache than engineers would like it to be. Low-power Wi-Fi plays nicely with its full-power brethren and has the potential to sweep both other wireless standards away. In the Broadcom (BRCM) booth at CES I got a demonstration of a lower power chip now ready to ship that allowed for high-definition video, graphics and audio in such a small package that you can already see all the little video devices/phones it will spawn. One very cool potential application combined that low power HD video chip with a motion control chip that Broadcom builds for the Wii controller and another very popular music device/phone that begins with the letter “i.” Basically, you get a handheld Wii, which, I would bet you’ll be seeing sometime in the near future.