Broadcom's IoT Unit Gets a New Life With Cypress
Cypress' $550 million acquisition of the business unit will make the company a larger player in the growing IoT market, says its new vice president.Broadcom's Internet of things business grew out of a pet project started a few years ago by a group of engineers interested in seeing what they could do with the company's WiFi and Bluetooth technologies to connect devices to the Internet and cloud that had never been connected before. They later would add a software development kit to enable developers to more easily create products and connectivity solutions using the Broadcom technologies. Soon they realized that the effort had become more than a project, according to Stephen DiFranco, who headed up Broadcom's Internet of things (IoT) business. "It grew into what became a real business," DiFranco told eWEEK, noting that in a recent 12-month period, the IoT business generated $189 million in revenue. However, the unit never fit comfortably within Broadcom, which had a business model of selling chips and wireless technologies into large enterprises. Conversely, dealing in the IoT—particularly in these early days, when the bulk of the IoT devices are consumer products—means selling to large numbers of customers, some no more than a single developer.
The awkwardness was heightened last year when Avago Technologies bought Broadcom for $37 billion. Like Broadcom, Avago sold its products to relatively small numbers of very large customers, DiFranco said. The technology the IoT unit had created was good; it was just that the business model didn't mesh with what the parent company was doing.